Vatican watchdog skips scandals in annual report

July 03, 2020

In his annual report, made public on July 3, the president of the Vatican’s Financial Information Authority (AIF) does not mention the October 1 police raid on the AIF offices, nor the abrupt departure of the agency’s top two officials.

Carmelo Barbagallo, who took over the AIF last November, shortly after the raid, reports closer cooperation with the financial-oversight agencies of other nations, and boasts of an “intensification of prudential supervision” of Vatican transactions. He says that a review of safeguards against money-laundering at the Institute for Religious Works found the Vatican bank “broadly compliant” and “sufficiently effective.”

Barbagallo announced that the AIF would be changing its name, becoming the Supervisory and Financial Information Authority (SFIA), explaining that the new name “highlights the Authority’s dual nature as intelligence unity and supervisory (and regulatory) authority.”

The annual report shows that AIF spotted 64 suspicious cases of suspicious financial activity during the past year, and referred 15 cases to the Vatican prosecutor. Those figures are roughly in line with the AIF’s actions from previous years; the results of the prosecutor’s investigations have not been disclosed.

But Barbagallo’s report makes no effort to explain why Vatican gendarmes raided the AIF offices, seizing documents and computer records, in an investigation of a suspicious London real-estate deal. The circumstances surrounding that raid, and the Vatican’s refusal to explain it, prompted some analysts to speculate that the raid was designed not to uncover wrongdoing at the AIF, but to thwart an AIF investigation into the investments made by the Secretariat of State.

In the wake of that raid, Tommaso Di Ruzza, the director of the AIF, was suspended and eventually terminated. René Bruelhart, the agency’s president, then resigned. And the Egmont Group— an international consortium of financial-oversight agencies— broke off its cooperation with the AIF, citing concerns about the security of shared confidential information. The AIF ties with the Egmont Group were restored early in 2020, but the episode was an unmistakable setback for the Vatican’s efforts to regain the trust of international financial authorities. In his annual report, Babagallo chooses not to mention that difficulty.

But Barbagallo does mention the importance of an upcoming evaluation by Moneyval, the European body that enforces standards against money laundering. Moneyval was scheduled to assess the Vatican’s efforts this spring; because of the CO19 lockdown, the test was rescheduled for September. Barbagallo’s report sees the Moneyval evaluation as “especially important,” explaining: “Its outcome may determine how the jurisdiction is perceived by the financial community.”

 

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Further information:

• Remarks by the President of AIF, Mr Carmelo Barbagallo, on the presentation of the Annual Report (Vatican News)
• Vatican watchdog sees record cooperation levels despite raid (AP)
• Vatican financial watchdog hails ‘rising trend’ in reports to Promoter of Justice (CNA)