RENÉ BRÜLHART made his name as head of Liechtenstein’s
financial-intelligence unit. Thanks to his diligence in rooting out financial crime over the past eight years, the tiny European principality, nestled between Switzerland and Austria, is no longer widely condemned as a haven for dirty money.
This success, combined with his good looks, led one magazine to dub the 40-year-old Swiss lawyer the James Bond of the financial world.
His latest job might unnerve even 007: Mr Brülhart has been recruited to clean up the Vatican’s reputation. For years allegations of financial shenanigans have swirled around the Institute for Works of Religion, commonly known as the Vatican Bank.
The bank is modest in size: as of last November it had just €6.3 billion ($8.3 billion) in assets, 33,400 accounts and 13 ATMs (for use by its own clients, which comprise religious organisations and individuals, Holy See lay employees and foreign countries’ embassies).
But it also has features that make it alluring to money-launderers: an evaluation in July by Moneyval, the Council of Europe’s anti-money-laundering group, pointed to high volumes of cash transactions, global activities and limited information on many organisations operating in the Vatican.
In the latest scandal, its president, Ettore Gotti Tedeschi, was sacked in May. He and his former employer are now caught up in a money-laundering investigation led by Naples prosecutors. Mr Gotti Tedeschi has denied wrongdoing, saying the reason he was fired was that he got “too close to the truth” about the bank’s dealings.
Only in December 2010 did Pope Benedict XVI issue a so-called Motu Proprio outlawing money-laundering and the financing of terrorism.
Mr Brülhart’s challenge is the same as it was in Liechtenstein: to get his client onto the all-important “white list” of territories that are deemed to comply with the standards on combating financial crime set by the OECD, a club of rich and emerging economies.
First, he will need to build a financial-intelligence unit that can investigate suspicious money flows properly. The Vatican has a group that is supposed to do this but it has made little progress, not least because its people lack training.
Second, he will need to create a truly independent supervising authority for the Vatican Bank and the Administration of the Patrimony of the Apostolic See, which manages the Vatican’s property and securities holdings.
A supervisor-of-sorts created by Benedict in 2010, the Financial Information Authority (FIA), lacks the legal powers and independence necessary to monitor and sanction these financial institutions, according to Moneyval.
The FIA has no clear right to demand access to books for accounts or other information, for instance.
Overall, the Vatican was compliant or largely compliant with only nine of Moneyval’s 16 core standards, proving deficient in areas such as customer due diligence and the reporting of suspicious transactions.
Mr Brülhart has the right pedigree to help. During his time transforming Liechtenstein’s bad-boy image, he was involved in the return of assets owned by the regime of Saddam Hussein to the new Iraqi government, as well as in uncovering the Siemens bribery scandal.
His efforts were recognised by his peers in 2010, when he was appointed deputy head of the Egmont Group, a network of national financial-intelligence agencies. His strong Catholic credentials should also help. He even studied canon law as a student in Fribourg.
He is said to have the strong backing of Cardinal Tarcisio Bertone, the Vatican’s powerful secretary of state, who hired him.
But he faces unique challenges.
The Holy See’s financial institutions are not straightforward commercial organisations, but “canonically recognised” public entities created to serve the church.
It is hard to introduce the sort of rules that brought Liechtenstein’s banks to heel.
And though he may have the support of the pope’s right-hand man, he is still an outsider trying to shake up the financial affairs of an ecclesiastical city-state that is notoriously resistant to change and external interference.
He will need Bond-like cunning to complete his mission.