Quote:Vatican bank sets up money-laundering unit hoping to escape scandal
New rules on transparency come after Italian court froze €23m of Vatican funds in September

John Hooper in Rome
guardian.co.uk, Wednesday 29 December 2010 20.10 GMT


The Vatican bank, whose ATM is behind St Peter's Basicila, is promising new transparency in its dealings. Photograph: Paul Owen

The Vatican today announced new rules to make its financial dealings more transparent and bring it into line with international legislation designed to prevent money-laundering.

The move came after an Italian court in September froze €23m (£19.6m) of the Vatican's money over claims that its bankers were trying to move the cash across international borders without identifying its source, destination or purpose. The head of the Vatican bank, Ettore Gotti Tedeschi, and his deputy are still under investigation on suspicion of money-laundering, although no charges have been brought against the two men, who both deny wrongdoing.

Full details of the new measures are to be released today. But a statement made clear they would include the creation of a new compliance authority and the introduction of legislation to combat money laundering and the financing of terrorism.

The Vatican bank, known as the Institute for the Works of Religion, or IOR, is perhaps the world's most extraordinary financial organisation. Its reputedly state-of-the-art facilities are housed in a 15th century tower next to the pope's palace and its ATM behind St Peter's Basilica is in Latin (a cash withdrawal being "deductio ex pecunia").

In the 1980s the IOR was at the centre of a long-running scandal arising from its involvement in the $1.3bn collapse of Italy's largest private bank, Banco Ambrosiano, and the death of the bank's chairman, Roberto Calvi, whose body was found hanging under Blackfriars Bridge in London. The Vatican denied any wrongdoing but paid $250m to Ambrosiano's creditors. More recently, in October, police in Sicily said they had uncovered a money-laundering operation that involved the use of an IOR account opened by a priest with family connections to the Mafia.

The IOR was set up to look after the wealth of Catholic organisations, such as religious orders. Its statutes allow lay individuals to open accounts, but only if the purpose is to promote "works of religion or charity".

The new rules appeared designed to comply with a mutually agreed deadline of 31 December for the implementation of the EU's money-laundering directive. The Vatican had also undertaken to set up a financial watchdog body by the first day of 2011.

The Holy See's lawyers have twice tried, without success, to get the Italian courts to free the assets seized three months ago. The Vatican, which appointed Gotti Tedeschi to impose greater transparency on the IOR and ensure it complied with international anti-money laundering regulations, has insisted the affair is the result of a misunderstanding and that it was merely trying to move its own cash around. But earlier this month an Italian judge criticised the Vatican bank for continuing to hide the identity of its clients.

David Guyatt Wrote:What fun...

But nothing new I'm afraid. The IOR has been tax evading and laundering mafia money for decades. It is its stock in trade.

David Guyatt Wrote:To murder a Godfather film phrase:

Good banking practice sleeps with the fishes....

Quote:The Istituto per le Opere di Religione was founded on 27 June 1942 by Pope Pius XII

David Guyatt Wrote:"The doors of all bank vaults open to the right".

So said Vatican insider and P2 "puppet master" Licio Gelli.

How right he was too. As far right as you can go, in fact. During WWII, Gelli was a member of Mussolini's fascist "black shirts" and acted as a liaison to the SS Hermann Goering Division.

And that, I suppose, is where this little trip down memory lane comes full circle"

According to the Wiki article on the Vatican Bank (the IOR):

Four Priests Charged In Vatican Banking Scandal