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Pope Commits Vatican to Money-Laundering Regulations

Vatican Expresses ‘Surprise’ at Bank Money-Laundering Probe
The Vatican expressed “surprise” after Italian finance police froze 23 million euros ($30 million) from an account registered to the Vatican Bank. Photographer: Chris Warde-Jones/Bloomberg

Pope Benedict XVI committed the Vatican to upholding European Union rules against money laundering and financial fraud amid an Italian probe into the Holy See’s banking operations.

In an apostolic letter published today on the Vatican’s website, the pope said a special Vatican authority will begin work in January to implement legislation enforcing the European laws. The move comes amid a money-laundering probe by Rome prosecutors into the Vatican Bank and its top two executives.

“Following the Monetary Convention signed by the State of Vatican City with the European Commission Dec. 17, 2009, I have approved the issue of the Law concerning the prevention and countering of laundering of proceeds from criminal activities and of the financing of terrorism,” Benedict said in the letter.

A “Financial Information Authority” will oversee the implementation of the new Vatican legislation, according to the letter. Vatican judicial officials will be charged with prosecuting any alleged violations of the new law, which will take effect on April 1, according to the statement.

“The implementation of the new norms will certainly require great commitment,” Vatican spokesman Father Federico Lombardi said in an e-mailed statement. “Vatican organizations will be less vulnerable in the face of the continuous risks that inevitably arise in the handling of money.”

Seized Funds

The Holy See is seeking to embrace greater financial transparency after scandals involving the Vatican Bank, known as the Institute for Religious Works, or IOR. It was implicated in the fraudulent bankruptcy of Banco Ambrosiano in 1982. Italian prosecutors in September seized 23 million euros ($30.5 million) from a Rome bank account registered to the IOR amid suspicions of money-laundering violations.

A Rome magistrate upheld the seizure of the funds in a Credito Artigiano SpA account, Ansa newswire reported on Dec 20. Vatican bank executives have denied any wrongdoing.

“These new laws are part of the Apostolic See’s efforts to build a just and honest social order,” the Secretariat of State, which oversees the Vatican’s diplomatic affairs, said today in a statement.

‘Fully Committed’

The Holy See is “fully committed” to putting relevant EU financial legislation into effect by the end of 2010, Amadeu Altafaj, spokesman for EU Monetary Affairs Commissioner Olli Rehn, said in an October interview in Brussels.

The Vatican is a sovereign city-state outside EU jurisdiction, though surrounded by Italian territory. The Holy See comprises the institutions, many located within Vatican City, that manage the Roman Catholic Church’s global affairs.

The new authority will be “the contact point” for the EU and international organizations active in combating money laundering, such as the Paris-based Financial Action Task Force, Altafaj said in October.

The Vatican said in September that it’s in talks with the Organization for Economic Cooperation and Development about getting on the Paris-based group’s so-called White List of nations that comply with global norms on financial transparency.

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