• Deal latest step in reform effort started by Pope Benedict XVI
  • Vatican, Italy to cooperate in fight against illicit actions

The Vatican and Italy’s central bank signed a cooperation agreement aimed at ending years of suspicions and mistrust in the financial accountability of the world’s smallest sovereign state.

The accord will “broaden the channels of information to monitor the relationship between Italian financial intermediaries and entities carrying out financial activities on a professional basis in the Vatican City State,” according to a Vatican statement on Tuesday. “Provisions on confidentiality and on the use of information are established.”

The deal is the latest step in a reform process started under Pope Benedict XVI and pursued by his successor Pope Francis to improve the Vatican’s position within the global financial system. After decades marked by scandals and secrecy, it is a recognition that the Vatican’s bank, known as Istituto per le Opere di Religione, and other Vatican financial institutions adhere to international standards of accountability and transparency.

The agreement was signed by Ignazio Visco, governor of the Bank of Italy, and Rene Bruelhart, head of the Vatican’s financial supervisor and regulator.

It will allow the “further strengthening of the bilateral cooperation between the Holy See and Italy in the common fight against illicit financial activities,” Bruelhart said in the Vatican statement.

Bruelhart’s office received 544 reports of suspicious financial activities in 2015, more than three times as many as in 2014, according to the annual report of the Vatican’s Financial Information Authority. Of those, only 17 were eventually referred to the Vatican’s prosecutor.

“This was not due to a higher financial crime rate,” the report said, but rather because of “the closure of all accounts that no longer complied with Vatican legislation and with policies adopted by supervised entities; the monitoring of customers’ activity under foreign countries’ voluntary tax compliance programs; and, in general, the strengthening of reporting mechanisms and supervised entities’ increasing awareness of reporting obligations.”

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