Papal decree
December 30, 2010
Pope Benedict XVI has signed a decree creating a new supervisory body to monitor transactions from the Vatican's central banking institution.
The new Financial Information Authority is to operate in a similar way to the supervisory bodies which overseas many central banks. The decree would be legally binding and pertain to all economic activities of the church-state's financial institutions.
The new measures come as the Vatican deals with an Italian money laundering probe into 23 million euros ($30.23 million) sequestered from the Vatican Bank, formally known as the Institution for Religious Works (IOR).
The IOR has been under investigation for suspected violations of European Union money laundering rules since September. It has denied any wrongdoing.
The Holy See says the new laws represent an attempt to bring more transparency to the financial dealings of the Vatican. As Turin newspaper La Stampa reported, the measures would also bring the operations of the IOR into line with international banking standards.
Vatican spokesperson Federico Lombardi said in September that the new supervisory body would help put the IOR back on the Organization for Security and Cooperation in Europe's (OECD) white list.
Shady dealings
The president of the Vatican Bank, Ettore Gotti Tedeschi, and his deputy, Paolo Cipriani, are under investigation amid allegations the bank authorized funds transfers without identifying the payee or recipient.
One was a transfer of 20 million euros to a German branch of a US bank and the other was three million euros transferred to an Italian bank.
Under Bank of Italy money laundering laws, financial institutions must provide detailed information on the origin of funds they transfer.
The Vatican denied the transactions were illegal, highlighting that the IOR is still subject to the Vatican courts. The Vatican Bank was involved in a political and financial scandal in the 1980s connected to the multi-billion-dollar collapse of Banco Ambrosiano, of which it was a major shareholder.
Author: Darren Mara (dpa, AFP)
Editor: Chuck Penfold