By Sabrina Cohen
Wall Street Journal
December 30, 2010
http://online.wsj.com/article/SB10001424052970204304204576051241293729776.html
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| Pope Benedict XVI in Aula Paolo VI at the Vatican during his weekly general audience on Wednesday. |
MILAN—Pope Benedict XVI Thursday ordered the creation of a financial authority that will supervise transactions to all government bodies at the Holy See, including the Institute of Religious Works, the Vatican's bank known as IOR.
The Vatican is creating a financial watchdog, called the Authority of Financial Information, to control suspicious transactions that could involve financing terrorism as well as market rigging, insider trading and market abuse.
The chairman of the Vatican authority will be named by the Pope and his mandate will expire after five years. He will also head a five-member executive committee named by the Pope. According to press reports, Cardinal Attilio Nicora is going to be the chairman of the authority.
The new financial authority will start operations from April 1, the Vatican said in a statement.
Vatican officials have been working on the new financial authority for over a year, together with Italian authorities, the Bank of Italy and the Organization for Economic Development, in a move to get the Holy See to comply with international directives on anti-money laundering and anti-terror financing legislation.
The Vatican's efforts accelerated, according to a person familiar with the matter, after Italian prosecutors in September placed the IOR's chairman, Ettore Gotti Tedeschi, and its director general under investigation on suspicion that they failed to comply with Italian laws against money laundering.
Neither man has been charged. Mr. Gotti Tedeschi has denied wrongdoing, and said the bank operates with "absolute transparency." The Vatican has denied that its officials acted improperly and said the investigation is the result of a "misunderstanding" between the bank and Italian authorities.
Mr. Scordamaglia, who also represents Mr. Gotti Tedeschi, said that he had no further comment on the probe.
As part of their investigation, prosecutors are trying to determine whether IOR clients used the Vatican bank accounts as a screen to mask the transfer of funds to Italy from Vatican City, which is a sovereign state outside the jurisdiction of Italian financial regulators, according to a person close to the probe.
For years, the IOR has transferred funds to its accounts at other banks on behalf of its clients without fully disclosing those clients' identities. In 2007, however, Italy introduced tougher disclosure laws, requiring banks to list the names of people who receive funds from IOR accounts and the reason for the transaction. In October, a judge ruled that €23 million ($30.34 million) in Vatican funds seized as part of the probe should remain frozen.
The IOR has been the financial arm of the Holy See since it was created in 1942 to manage accounts held by priests, cardinals and bishops as well as religious orders.
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