Friday, December 20, 2013

Sharp rise in Vatican's suspicious financial transactions

European evaluators have given the Vatican a mixed report card in its efforts to comply with international norms to fight money laundering and terror financing, praising progress over the past year while highlighting delays and shortcomings at the Holy See's financial watchdog agency. Chief among them: its failure to inspect the embattled Vatican bank.

In the progress report released Thursday, the Council of Europe's Moneyval committee revealed that 105 suspicious transactions had been flagged to the financial watchdog agency in 2013 as potential cases of money-laundering — a significant increase over 2012 when only a half-dozen were reported. The increase stemmed from the bank's ongoing process to review all accounts at the Institute for Religious Works to make sure its customers and assets are clean.

Three of those cases were forwarded to Vatican prosecutors for investigation, including one that made headlines earlier this year: the case of the Vatican accountant, Monsignor Nunzio Scarano, who was arrested by Italian authorities in June after he allegedly tried to smuggle 20 million euros ($26 million) from Switzerland into Italy without declaring it at customs.

The Scarano affair prompted the bank's top two managers to resign and laid bare the lax controls that for years fueled the bank's reputation as an off-shore tax haven where money could be laundered. Scarano is also under investigation for alleged money-laundering in a separate case involving his Vatican bank accounts; Vatican prosecutors seized 1.98 million euros from his accounts as part of its own investigation, the report showed.

The Vatican submitted itself to the Moneyval evaluation process more than three years ago in a bid to shed its shady reputation and comply with the requirements of signatories to the 2009 EU Monetary Convention. Since then, the Vatican has written and rewritten laws criminalizing money laundering, ratified U.N. anti-crime treaties and created the financial watchdog agency to supervise its financial activities and work with other countries in cross-border investigations, among other measures.

Pope Francis has ramped up the reforms, forming two commissions of inquiry to try to rationalize the Vatican's opaque and often wasteful finances and make sure institutes like the bank are serving the church.

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