Vatican Goes 'Cash Only' Because of Lack of Money-Laundering Controls

By Harvey Morris
The New York Times
January 04, 2013

http://rendezvous.blogs.nytimes.com/2013/01/04/vatican-goes-cash-only-because-of-lack-of-money-laundering-controls/

Tourists waited on Thursday to pay cash for tickets to the Vatican Museums.

LONDON — If you’re planning a trip to the Vatican, be sure to take cash.

Since Wednesday, museums and businesses in the Holy See have been declining credit card and debit card purchases following a decision by the Bank of Italy that is reportedly linked to concerns over inadequate money-laundering controls.

Cash machines have also been shut down after the Italian central bank refused authorization for Deutsche Bank’s Italian unit to continue operating services it provided within the Vatican’s walls.

An Italian treasury official said last month that the Vatican could no longer use the services of Italian-based banks in the light of new rules against money laundering, according to Vatican Radio.

“The Bank of Italy could not give the authorization because the Vatican, apart from not respecting money-laundering regulation, did not have the legal prerequisites,” Reuters reported, quoting a source close to the Bank of Italy.

The banking freeze, which has prompted the move to cash-only transactions, and which Vatican officials have tersely dismissed as a technical problem, has prompted speculation in the Italian press that a fresh scandal is about to erupt involving the ministate’s still-shadowy finances.

Pope Benedict XVI has pledged to throw light on the Holy See’s finances and on its ultrasecretive Institute for Works of Religion, otherwise known as the Vatican Bank. He has even hired a Swiss expert in money laundering controls, René Brülhart, to oversee the process.

A report by Moneyval, an official European financial watchdog, reported last year that the Vatican was failing in almost half the criteria required to meet standards of financial transparency. The Holy See had come a long way in a short time, the report said. However, the Vatican Bank continued to lack independent supervision.

Mr. Brülhart’s brief involves getting the Vatican included in a “white list” of territories judged to comply with international standards on combating financial crime.

The Vatican’s efforts to shake off a reputation for shadowy finances date back to 1982 and the collapse of the Banco Ambrosiano, in which the Vatican Bank was a major shareholder.

At the height of that scandal, the body of Roberto Calvi, the Ambrosiano chairman known as “God’s banker” for his Vatican ties, was found hanging beneath Blackfriars Bridge in London.

The Ambrosiano affair was not the last of the Vatican’s troubles, however.

Just last May, the Vatican Bank fired Ettore Gotti Tedeschi, its chairman, after a three-year tenure marred by financial scandal. In 2010, Italian prosecutors seized the equivalent of $29 million from a Rome bank account registered to the Vatican Bank, amid suspicions of money-laundering violations.

As the current ban on credit cards suggests, the Vatican’s efforts to clean up its finances have only been partially successful.

The Rev. Federico Lombardi, the Vatican spokesman, said contacts were under way with other operators to resume normal banking services and the suspension would be “short-lived.”

In the meantime, at the Vatican’s museums and souvenir stores, it’s cash only, please.