Thursday, December 26, 2013

Another Swiss guard: Finance officer works to protect the Vatican

News headlines in 2013 about turmoil at the Vatican bank and an arrested monsignor who served as a Vatican accountant seem to be modern-day illustrations of a famous line from the First Letter of Timothy in the New Testament: "For the love of money is the root of all evils, and some people in their desire for it have strayed from the faith and have pierced themselves with many pains."

But from his office near the Vatican gas station, a young Swiss lawyer is working to prevent the greedy or corrupt from misusing the Vatican's financial structures, which serve its own operations and those of dioceses, schools, hospitals and charitable activities around the world.

Rene Brulhart, 41, is director of the Vatican's Financial Intelligence Authority, charged with establishing procedures and checks to ensure Vatican institutions cannot be used for money laundering or the financing of terrorism. He also investigates suspicious transactions and works internationally with other government financial-intelligence units to fight financial crime.

Pope Francis has appointed special commissions to look into specific aspects of the Vatican's finances and budget process, as well as the Vatican bank, formally called the Institute for the Works of Religion. Those commissions are still meeting and Pope Francis has said the results of their work are not foregone conclusions.

But Vatican City State is an independent country, and the Holy See serves a global community of more than 1 billion Catholics. With or without the so-called Vatican bank, money will change hands, and Brulhart's job is to help ensure those hands are clean.

The Vatican is unique in its financial sector, in that the 109-acre state has no commercial banking operations, so "it makes sense to come up with a tailor-made system," Brulhart said.

"It's a different environment in a positive sense," he said. "It's an environment built on trust and respectful interactions, which makes it different from an ordinary commercial activity."

Brulhart was working for a law firm when the government of Liechtenstein hired him in 2001 to help establish an anti-money laundering system, after the country briefly appeared on the international Financial Action Task Force's black list.

The Vatican, he points out, is not now and has never been on the FATF's black list.

Under Pope Benedict XVI, the Vatican hired Brulhart as a consultant on combating money laundering and terrorism financing, before the pope appointed him director of the Financial Intelligence Authority.

Novelists and filmmakers paint a shady image of Vatican financial dealings, but "the facts are telling another story," Brulhart said.

In 2010, the Vatican began drawing up new finance laws, regulations and criminal penalties in compliance with international standards against money laundering and the financing of criminal and terrorist networks. The Vatican later requested an evaluation of its efforts by "Moneyval" -- the Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism.

The latest Moneyval review, published Dec. 12, praised the new laws and procedures, as well as new norms strengthening Brulhart's office. It also praised the Vatican bank's review of its accounts and clients, which Brulhart said was conducted in coordination with his office.

Moneyval urged the Financial Intelligence Authority to expedite onsite inspections of the so-called Vatican bank and the Administration of the Patrimony of the Holy See. Brulhart said the inspection of the Institute for the Works of Religion is scheduled for January.

Day-to-day, he said, his office reviews reports of suspicious transactions, while working to improve international cooperation and tighten supervision of Vatican financial transactions.

"The legal and institutional frameworks have been established," he said; now it is time to make sure the procedures come to be seen as absolutely normal operating procedures. "It's a building process now."

In its December report to Moneyval, the Vatican said 105 "suspicious transaction reports" had been filed with Brulhart's office in 2013. "A suspicious action report indicates suspicious behavior and not, per se, criminal activity," he said, arguing that the growing number of reports shows Vatican institutions are paying greater attention to financial transactions and noticing when something appears out of the ordinary.

"The preventive approach is very important," Brulhart said. "Ultimately, what we're aiming for is to have an early warning system."

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