The Vatican and Transparency: Moneyval's Objections
By Andrea Tornielli
Concerns have been expressed in the report that is to be discussed with the Holy See, over the reorganisation of the body that monitors Vatican finances and the political influence of the Secretariat of State The draft report containing Moneyval assessors' initial observations arrived in the Vatican a couple of days ago but remains top secret. Moneyval is the committee of Council of Europe experts whose task it is to assess measures taken against money laundering and terrorism financing. The assessors were called to evaluate the progress made by the Holy See in getting in line with international regulations. The draft of the report which Moneyval still needs to discuss with Vatican authorities, recognised the areas where progress has indeed been made, but also pointed out some issues that still need to be resolved, including the reorganisation of the role and tasks of the AIF, the domestic financial monitoring authority, which came about when the new transparency law - promulgated last January - came into force. It looks like the Vatican still has a long way to go until it can be added to the "white list" of financially virtuous countries and complete all steps towards the transparency called for by Benedict XVI. As previously stated, Moneyval's report is still just a draft: the appraisals of individual assessors have not yet been discussed to provide a jointly agreed set of points. A meeting is due to take place in Strasbourg between 14 and 16 May 2012, to clarify everything. Here, the Vatican delegation will make observations and offer clarifications. There is no doubt whatsoever, however, that the draft's passages, which define the reorganisation of the AIF and the emphasis on the role and influence of the Secretariat of State as steps backwards, will spark controversy in the Holy See. Readers will recall an internal memorandum that was published in recent months by Italian newspaper Il Fatto Quotidiano, communicating AID President, Cardinal Attilio Nicora's bafflement at certain paragraphs of the new transparency law. The first law on money laundering (No. 127), written by lawyer Marcello Condemi, who previously authored Italy's financial laws, established the Vatican Financial Information Authority (AIF) which was put entirely in charge of monitoring Vatican finances. Following Moneyval's initial requests in their attempt to bring the Vatican more in line with international standards, that is, to the "FATF Recommendations" (Financial Action Task Force), the Vatican Secretariat of State initially asked Condemi to make some changes to his text. Given the tight deadlines, they then entrusted a new team of experts with the task. This is how emergency decree No. 59, which came into force last 25 January, was prepared, becoming ordinary law on 2 April 2012. Vatican Insider has learnt that the Moneyval report particularly contests paragraph 41 of the decree; the one regarding the exchange of information written "on conditions of reciprocity" which should happen between the AIF and similar authorities in other States. The Moneyval assessor who dealt with the question considers this to be a step backwards. The expert contested political influence and responsibility acquired by the Vatican Secretariat of State's in the anti-money laundering battle. The new law introduced changes and conditions in relation to money laundering, outlining responsibilities of the various authorities, staring with those of the AIF. However, it also recognised the role of other entities that form part of the Vatican legal system, such as the Gendarmerie and the courts, which was practically non existent in the old law. It also specified that AIF inspections must be regulated by the Pontifical Commission for the Vatican City State, the only body that is able to issue laws. The AIF retains the power to introduce implementation regulations, including binding ones, and its power to inspect has been recognised (unlike in the previous law where it is not mentioned). But Cardinal Nicora has claimed that this has weakened the power and autonomy of the Vatican's financial monitoring body. His view is shared by the President of the IOR, Ettore Gotti Tedeschi. Jeffrey Lena, the American lawyer who has handled certain questions for the Holy See over the last twelve years noted that "speculation about the language of the report and its meaning is premature. The coming meetings in Strasbourg are intended to continue and deepen the assessors' understanding and to discuss whether the language of the report reflects adherence to international criteria." Lena noted that Moneyval itself stated that this was still just a provisional, not a conclusive report and added: core question is not whether any particular entity is "strong" or "weak". The question is whether the system overall is putting in place the technical assets and mechanisms that promote both internal and external cooperation, such that the entire system can function against money laundering." In as far as the "political" influence of the Secretariat of State is concerned, Lena noted that: "Those who confuse political commitment and political involvement with some sort of political interference are simply mis-reading the law, in my view. Indeed, sections of the law relating to the execution of memoranda of understanding between financial intelligence units, or responsibility of the Secretary of State to set overall policy, are not only appropriate, but in line with international standards. This is what counts." Moneyval's draft report, which is being circulated in the Vatican, reflects the Vatican's internal debate regarding the evolution of the law over the past few months and the various points of view that have emerged. The results of Moneyval's objections will be made known after next week's discussions, particularly after the July session.
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