Vatican's Financial Rules Found Wanting

By Guy Dinmore and Giulia Segreti
Financial Times
July 18, 2012

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The Vatican's efforts to adopt international standards in combating money laundering and terrorist financing have been given a mixed assessment in a landmark European survey of its historically opaque financial system.

Releasing its eagerly anticipated report on Wednesday, the 47-nation Council of Europe said the city state had "come a long way in a very short period of time" in terms of putting in place the "building blocks" of appropriate financial regulations.

But it also said the Vatican had to address important issues to demonstrate that a fully effective regime existed in practice, signalling that it could be a lengthy process before the Vatican meets the standards necessary to be accepted into what is informally known as the "white list" of countries.

The Vatican had requested the first such outside rating as part of Pope Benedict XVI's push to bring the Holy See into line with international standards. But the process of reforming the Vatican's traditionally secretive bank has been marred by setbacks and what some observers see as a behind-scenes power struggle that resulted in the abrupt dismissal of its president, Ettore Gotti Tedeschi, in May.