Pope sets out new rules for Vatican banking transactions

December 30, 2010

Pope Benedict XVI has released a new set of regulations governing all financial transactions by the Vatican and bringing the Holy See into line with new European banking standards to prevent money-laundering and other forms of fraudulent banking transactions.

The new Vatican rules, set forth in a motu proprio released on December 30, come at the end of a year marked by complaints that the Vatican bank, the Institute for Religious Works (IOR), had been involved in questionable money transfers. In September, Italian banking authorities seized €23 million in funds from the IOR as part of money-laundering investigation. Italian courts have rejected the Vatican’s bids to free those funds, authorizing the investigation to continue.

By issuing the new regulations, the Vatican meets a December 31 deadline for compliance with new European banking regulations. Without meeting those European standards, the Vatican might not have been able to continue its participation in European monetary accords.

Along with the new financial standards—which apply not only to the IOR but to all agencies of the Vatican city-state and of the Roman Curia—the Pope has created a new bureau, the Financial Information Authority, to supervise transactions and prosecute any violators. According to Roman news reports Cardinal Attilio Nicora, the president of the Administration of the Patrimony of the Holy See, will chair the new body.

The new financial regulations will take effect April 1.

In issuing the new regulations, Pope Benedict explained that “the inappropriate use of the market and the economy” is among the problems that have grown more severe in a globalized society. “Quite rightly,” the Pope wrote, “the international community is increasingly equipping itself with juridical principles and instruments that enable it to prevent and contrast the phenomena of money laundering and the financing of terrorism.”

In an accompanying statement, the Vatican Secretariat of State explained in greater detail the purposes of the new and regulations: to guard against money-laundering, fraud, counterfeiting. The new standards set rigid requirements for disclosure about the parties to, and purposes of, financial transactions. The rules also require verification of financial details and reporting of suspicious activities.

In yet another statement released on December 30, the director of the Vatican press office, Father Federico Lombardi, repeated the reason for the new rules, saying that financial transactions can be used for “the recycling of the profits of crime and financing of terrorism.” “It would be ingenuous,” Father Lombardi observed, “to imagine that the perverse intelligence of the people who control illegal activities would not seek to exploit certain weak spots which sometimes exist in the international systems that defend and oversee legality, in order to penetrate and violate them.” He did not acknowledge that the Vatican bank has become a suspected “weak spot” in the international financial system.

Vatican officials have reportedly been preparing the new guidelines for several months. But the pace of work on the new rules was increased dramatically, insiders report, after the announcement of an investigation into the Vatican bank.

 

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Further information:

• Motu Proprio on Illegal Activities in the Financial Sector (VIS)
• Communique of Secretariat of State on Pope's Motu Proprio (VIS)
• Fr. Lombardi's Note Concerning the Motu Proprio (VIS)
• Father Lombardi comments on the new rules against illegal financial activities (Vatican Radio)
• Vatican Outlines Rules to Fight Money Laundering (Wall Street Journal)
• Pope Benedict Binds Vatican to European Money-Laundering Laws (Bloomberg)
• Vatican issues laws vowing financial transparency (Reuters)
• "Transparency, honesty and responsibility" (L'Espresso)