Pope to Bind Vatican to Money-Laundering Law, EU Says

Pope Benedict XVI will bind theVatican to implementing European Union laws against moneylaundering and financial fraud, the European Commission said,after the Holy See’s bank was tainted by a series of scandals. 

The Vatican is “fully committed” to putting relevant EUlegislation into effect by the end of 2010, as stipulated by amonetary accord the Vatican signed with the commission Dec. 17last year, Amadeu Altafaj, spokesman for EU Monetary AffairsCommissioner Olli Rehn, said in an interview in Brussels.

A joint EU-Vatican committee, set up under the agreement,“discussed in detail” a draft Vatican law “approximating”the EU rules at an Oct. 15 meeting, Altafaj said. 

By an “act ofthe pope,” the law will become applicable to “the institutionsof the Holy See, including the Institute for Religious Works,”as the Vatican Bank is called, Altafaj said Oct. 26. 

Theinformation was confirmed today by a high-ranking Vaticanofficial, who declined to be identified, citing Vatican policy.

After scandals that included IOR involvement in thefraudulent bankruptcy of Banco Ambrosiano in 1982, the Vaticanis seeking to embrace financial openness after a push by theGroup of 20 nations for greater transparency in the wake of theeconomic crisis. 

The Vatican’s efforts came under scrutiny lastmonth when Italian prosecutors seized 23 million euros ($32million) from a Rome bank account registered to the IOR andopened an investigation into the Vatican Bank and its top twoexecutives for alleged violations of money-laundering laws.

‘Offshore Bank’

Altafaj’s comments come after Italian media, including thenewspaper Libero, had said the Vatican may not respect the Dec.31 deadline to implement the EU legislation. 

Not complying withthe deadline could nullify the monetary accord with thecommission and lead to action by the European Court of Justice. 

The accord also sets rules for the Vatican, which uses theEuropean single currency, on the issuance of euro coins.

“The IOR has long acted as an offshore bank mostly forItalian businessmen and politicians close to the Roman Curia,”the Vatican’s governing body, Gianluigi Nuzzi, author ofVaticano SpA (Vatican Inc.), a book about the IOR, said by phonebefore Altafaj’s remarks. “Maybe that’s starting to change.”

The Vatican agreed on Oct. 15 to set up a special authorityas of Jan. 1 to implement the new financial legislation “withthe right to control the institutions of both the Vatican andthe Holy See,” Altafaj said. 

The Vatican is a sovereign city-state outside EU jurisdiction, though surrounded by Italianterritory. 

The Holy See refers to the institutions, many locatedwithin Vatican City, that manage the Roman Catholic Church’sglobal affairs.

‘Clear Improvement’

The new authority will be “the contact point” for the EUand international organizations “active” in combating moneylaundering, such as the Paris-based Financial Action Task Force. 

“This shows a strong level of commitment by the Vatican inimplementing the legislation,” Altafaj said. “It’s a clearimprovement from the current situation.”

The authority’s head is likely to be Cardinal Attilio Nicora, who will become a sort of “central banker of theVatican,” Corriere della Sera reported on Oct. 26, citing noone. 

Nicora currently oversees the Administration of thePatrimony of the Holy See, which manages financial assets andreal estate belonging to the Holy See. 

He was recently named tolead efforts to bring the Vatican in line with EU financiallegislation, the Vatican’s Osservatore Romano newspaper said onSept. 23.

‘Judas’

In May, Nicora was asked in an interview on state-run RAI3television about cases of alleged corruption involving Italianbusinessmen and Catholic Church officials. 

“The community ofthe apostles also picked the wrong administrator, whose name wasJudas,” he said, referring to the man whose betrayal led toChrist’s crucifixion.

Rome prosecutors last month opened a probe into whether theVatican Bank violated money-laundering laws by omittinginformation in wire-transfer requests from an IOR account atCredito Artigiano SpA. 

The case stems from a misunderstandingwith the Italian bank, the Vatican said on Sept. 21. ChairmanEttore Gotti Tedeschi, who joined the IOR last year, andDirector General Paolo Cipriani are also being probed. TheVatican has said it has “full confidence” in them.

Under Gotti Tedeschi, 65, who also teaches ethics infinance at Milan’s Catholic University, the Holy See has soughtto improve the IOR’s image after scandals that included the $1.3billion collapse of partly Vatican-owned Banco Ambrosiano, onceItaly’s largest private bank. 

Its former Chairman Roberto Calvi,dubbed “God’s banker,” was found hanged under London’sBlackfriars Bridge in June 1982.

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