Vatican Prelate Accused of Money Laundering

By Lizzy Davies
The Guardian
January 21, 2014

http://www.theguardian.com/world/2014/jan/21/vatican-priest-accused-money-laundering

Scarano’s arrest last year came as an embarrassment to the Vatican, which is making efforts to boost its financial institutions’ safeguards against money laundering. Photograph: Filippo Monteforte/AFP/Getty Images

A Vatican prelate already on trial for an alleged plot to smuggle ˆ20m (?16.5m) into Italy on board a plane faces fresh accusations that he used his accounts at the Vatican bank to launder money.

Prosecutors in the southern Italian city of Salerno said on Tuesday that Monsignor Nunzio Scarano, a 61-year-old former accountant in the Vatican's asset management division, had been served with an arrest warrant on suspicion of using offshore accounts to funnel millions of euros in fake donations through his accounts at the institution.

Scarano, already under house arrest following his high-profile detention last June, was accused alongside another priest and a notary. Police said on Tuesday they had made seizures of assets and property worth millions of euros. Fifty-two others were reportedly being investigated.

The investigation into money-laundering allegations was already under way when Scarano was arrested last year. At that time, he denied the accusations through his lawyer, Silverio Sica, and, on Tuesday, Sica said his client had merely taken donations from people he thought were wanting to fund a home for the terminally ill.

"We continue to strongly maintain the good faith of Don Nunzio Scarano and his absolute certainty that the money came from legitimate donations," he told Associated Press.

The latest twist in the saga of Monsignor 500- the prelate so-called because of his alleged fondness for the highest denomination of euro notes – shines a spotlight once again on the potential pitfalls of the Institute for Religious Works (IOR), the official title of the Vatican bank.

Scarano's arrest last year, along with a secret service officer and financial intermediary, came as an embarrassment to the Vatican, which is making efforts to boost its financial institutions' safeguards against money laundering.

Scarano – who spent last summer in jail before being released under house arrest due to ill-health – argued that he had merely been acting as a middleman for friends in the organisation of the ultimately aborted smuggling plot.

He had already been suspended from his job as an accountant in the Administration of the Patrimony of the Apostolic See (Apsa) and, after his arrest, his IOR accounts were ordered to be frozen by the Vatican's promoter of justice.

However, the impact of yet another scandal hit the institution hard, and, several days after Scarano's detention, the IOR's director and deputy director resigned. Pressure mounted on the bank to show it was capable of reform and becoming more transparent.

Pope Francis, who has made no secret of his desire for change, is overseeing a process of overhaul and fresh scrutiny – but has not ruled out closing the bank if it cannot meet sufficiently high standards.

During the Scarano investigations, the IOR has said it is co-operating fully with the Italian authorities, and on Tuesday Elena Guarino, the lead magistrate on the case in Salerno, concurred, telling journalists the IOR had "opened its doors" to them.