Vatican: New Transparency Laws Have Now Been Made Official

By Andrea Tornielli
Vatican Insider
April 23, 2012

http://vaticaninsider.lastampa.it/en/homepage/the-vatican/detail/articolo/vaticano-vatican-trasparenza-transparency-transparencia-14601/

Vatican: New transparency laws have now been made official

Emergency decree No. 159 which contains the new anti money laundering laws published last 25 January has been an ordinary law since last 2 April, when it was confirmed as such by the Pontifical Commission for the Vatican City State. The law is to be published officially tomorrow, one day before the end of the 90 day deadline given for its enforcement (after which it would have lapsed, had it not been approved).

No significant modifications have apparently been made to last January’s version of the text – which Vatican Insider had published in full. The Council of Europe’s Moneyval team (a Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism) is currently monitoring the Vatican’s conformance to international financial standards. Meanwhile, the Vatican is hoping to be added to the “white list” of “virtuous” Countries.

A number of changes were however introduced to the old law (No. 127) in last January’s decree. Emphasis is placed on the “compulsory” nature of the provisions of the AIF, the Vatican’s internal watchdog, led by Cardinal Attilio Nicora. The decree also introduces a law which requires all legal personnel to be registered with the Governorate, so as to keep a constant check on who the legal figure in charge of each body is as well as on the nature and purpose of the body operating on Vatican territory. Furthermore, the penal laws on money laundering and the financing of terrorism - for example on the precautionary measures to be taken before a sentence is given out and confiscation as a result of money laundering crimes - are outlined with greater precision.

The competencies of all the various authorities are also outlined, starting with those of the AIF, which is a monitoring and supervision body. These competencies explicitly include the right to carry out inspections, the competencies of the Financial Intelligence Unit and the power to impose sanctions. The agreement protocol between the AIF and equivalent bodies in other Countries are recognised as not optional. Unlike the old law, the new one recognises the role of other Vatican legal entities, such as the Pontifical Gendarmerie and the Vatican court system. Finally, the new law explicitly recognises the operational independence of the AIF, which has control over every single financial operation carried out by the Roman Curia’s dicasteries and by all Holy See entities.

The new law specifies that AIF inspections have to be regulated by the Pontifical Commission for the Vatican City State, the only body that has the power to issue laws. But in terms of executive and binding laws, the power lies in the hands of the AIF.

In addition, the new law explicitly introduces the power to carry out inspections, which was not included in the previous law. Under the new law, the Secretary of State plays a more active role and the Gendarmerie and APSA (Administration of the Patrimony of the Apostolic See) are also mentioned: while the 2010 law did not indicate the subjects by the activities included in the law, the new decree provides a list of the various subjects. According to the authors of the new text, by distributing anti money laundering related tasks among a number of entities, the Vatican legal system will be brought closer to international standards.

Under the new law, the Vatican would bring the Vatican’s financial laws more into line with international standards that is with the 49 Recommendations made by the Financial Action Task Force (FATF), the guidelines that all “virtuous” States are expected to follow. As readers will recall, the internal debate over the new law, which came to light in recent months after the publication of confidential memos, was rather heated. The first anti money laundering law written by the lawyer Marcello Condemi had established the AIF which was the sole body entrusted with the task of monitoring “Vatican finances”. During his collaboration with the Bank of Italy, Condemi had written the laws that are currently in place in Italy.

There are two sides to the coin in the passage of this new law. On the one hand, is the Vatican Secretary of State and Governorate which believed that the old law followed Italian regulations too closely. They also intended to safeguard transparency as well as the autonomy and sovereignty of the Vatican City State and the Holy See, deeming all Holy See entities responsible for the money laundering activities. On the other hand, are the concerns expressed by Cardinal Nicora and shared by a few members of the AIF and the President of the IOR, Ettore Gotti Tedeschi, who were less inclined to make any changes to the laws approved in 2010 regarding the role and powers of the internal financial monitoring authority. Different teams worked on the two texts: the first one was led by Condemi and worked against a tight deadline, while the second one was put together by the Vatican Secretary of State and the Governorate.

Everyone is awaiting the results of Moneyval’s evaluation with anticipation. They should come out in the coming weeks, after the first and second laws have been examined. Moneyval will prepare a report to be discussed with the Holy See ahead of the July deadline, at which point the Vatican will express its position at Moneyval’s general assembly.