Vatican Agrees to Financial Transparency Following Critical Moneyval Report

By Andrew Trotman
The Telegraph UK
April 10, 2013

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9985347/Vatican-agrees-to-financial-transparency-following-critical-Moneyval-report.html

Pope Francis could restructure or close the Vatican bank in a clean-up of the central administration of the world's largest single Church

The Vatican has volunteered to widen the terms under which it is assessed for financial transparency, following a critical report by European money laundering watchdog Moneyval.

The Holy See is seeking to shake off a reputation for murky finances after a year in which documents alleging corruption in its business dealings were leaked by Pope Benedict's butler, and the head of its bank was ousted in a row over transparency.

In a July 2012 report Moneyval, a department of the Council of Europe, criticised the Holy See for non-compliance with global financial transparency norms and gave it negative grades in seven out of 16 so-called "core" and "key" recommendations.

Under Moneyval rules, the Holy See has until July 4 to comply with all "core" recommendations, for example fully establishing the source and legality of funds and reporting suspicious transactions.

The Vatican, in addition, has voluntarily decided to also address the "key" recommendations it was not fully compliant with by the deadline, Moneyval told Reuters. These include ensuring that financial institutions are properly regulated, and that banking authorities fully cooperate with international counterparts.

This means the Vatican will also address key recommendations on preventing the "financing of terrorist acts" and having a system for "freezing and confiscating terrorist assets".

Much of the criticism of the tiny city state's lack of financial transparency has focused on the Institute for Religious Works (IOR), the Vatican bank which has been at the centre of repeated scandals over the years.

Pope Francis, who has maintained his reputation for frugality since he was elected last month, could restructure or close the bank in a clean-up of the central administration of the world's largest single Church, according to sources.

The Vatican has struggled to shift an image as a suspect financial centre since 1982, when Italian Roberto Calvi, known as "God's Banker" because of his links to the Holy See, was found hanged under London's Blackfriars Bridge.

The 2012 Moneyval report said the Vatican had a long way to go until it could be included on its "white list" of countries that abide by global norms on combating money laundering, the financing of terrorism and tax evasion.

The Vatican will report its progress in addressing the financial transparency concerns by July, and will meet with the Moneyval committee between December 9 and 13. Moneyval will publish its response to the Holy See's report shortly afterwards.

"With this initiative, the Holy See wishes to provide a more complete overview of the measures taken over the last year to further strengthen its institutional structure in the area of preventing money laundering and the financing of terrorism," a text on the website of the Vatican's official radio said.