European financial commission sees progress at Vatican, but wants tougher prosecution

June 09, 2021

European bank regulators have given the Vatican satisfactory grades for its efforts to combat money-laundering, but pointed to weakness in the Vatican’s prosecution of financial misconduct.

A long-awaited report by the Moneyval commission, an arm of the Council of Europe, said that the Vatican was in compliance with European standards for disclosures of banking transactions. The 270-page report welcomed new policies that the Vatican has put in place in recent years to eliminate opportunities for money laundering.

However the Moneyval commission observed that Vatican prosecutors have brought few cases to trial, and those convicted of financial misconduct have received light sentences. Moreover the report said that the Vatican has prosecuted only low-level officials, and “raised a red flag for potential abuse of the internal system by mid-level and senior figures (insiders) for personal or other benefits.”

The European regulators had offered similar findings in their last appraisal of the Vatican’s financial-security measures, saying that new policies had eliminated most opportunities for money-laundering, but complaining that the Vatican had not aggressively prosecuted misconduct—particularly by ranking officials.

Moneyval suggested that the Vatican prosecutors were understaffed and inexperienced, and subject to potential conflicts of interest. The report called for a substantial strengthening of the enforcement staff. The European body will follow up with a new evaluation after giving Vatican officials time to implement the report’s recommendations.

“I would say that it went well,” said Carmelo Barbagallo, the president of the Vatican’s Supervisory and Financial Information Authority (ASIF). He remarked that Moneyval reports are notoriously tough in grading regulators, and so he was pleased with judgment that the Vatican had reached “substantive” effectiveness in several areas covered by the report.

Moneyval was highly critical of an October 2019 police raid on the offices of ASIF (formerly known as AIF). During that raid, the European body noted, Vatican prosecutors had access to confidential information that was shared by other European regulatory agencies. European bank regulators temporarily suspended cooperation with the Vatican after that raid, until receiving assurances that no confidential information would be released in the future.

Vatican officials indicated that they planned to act on the recommendations from Moneyval. The report’s emphasis on the need for tougher prosecution—and particularly for the strict scrutiny on the activities of top officials—could have serious implications for influential Vatican figures who have been implicated in questionable transactions, notably including Cardinal Angelo Becciu. After revelations of his role in an unauthorized London real-estate deal, Cardinal Becciu was forced to resign, but he has not yet been charged with any crime.

 

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Further information:

• Press Release of the Holy See, 09.06.2021
• MONEYVAL recognises the progress made by the Holy See (Council of Europe)