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Policing the Vatican to keep the crooks lean
By Rachel Sanderson
THE office of René Bruelhart, the Vatican's chief antimoney-laundering cop, is in an ochre building within the Vatican walls and overlooking a quiet park near St Peter’s Basilica. On a sunny day, the calm scene is unexpected after the swell of tourists and pilgrims beyond the confines of the world’s smallest city state. More surprising is that his neighbour in the modest residence next door is Pope Francis. In one of the first acts of his papacy, the Argentine pontiff chose to give up the usual papal residence for a sparse dormitory usually used by travelling clergy. Security has been stepped up after the move, with a greater presence of Swiss Guards, the traditional gatekeepers of the papal state. But how has Bruelhart’s job altered since the arrival of Pope Francis in early 2013? The 43-year-old Swiss lawyer’s face brightens. "(The job) has changed tremendously; I really find open doors," he says. "I’ve just come back from the US, and politicians, people from the private sector, really top level, are saying: ‘If I can help, I am happy to help’." Bruelhart is in the tricky position of a manager who has the support of the leader but also has the challenge of helping to instigate change. Not all staff in the 2,000-year-old organisation see a need for urgency; meanwhile, it is keenly watched by its 1.2-billion members. He joined the Holy See late in 2012, in the darkest days of Pope Benedict’s waning papacy, when the Vatican was on the brink of being shut out of financial markets because of its failure to comply with international money-laundering rules. A corruption scandal erupted shortly after Bruelhart arrived, involving a priest who worked at its central bank. "At some point, of course, some scandal will happen again, but we have the instruments to deal with that and we have our credibility back, based on facts," he says. Bruelhart’s experience is testament to the Holy See’s rocky transition from pariah state to having a bona fide place in the international financial system under Pope Francis. In his previous role as head of the financial intelligence unit in Liechtenstein, Bruelhart worked on the return of assets owned by the regime of Saddam Hussein to the new Iraqi government. He also helped uncover the Siemens contract scandal of 2006 that involved bribery of government officials. THIS international profile, combined with crisp good looks, smart suits and a refusal to divulge any personal details, have led some in the media to call him the James Bond of the financial world. He dismisses this comparison with a laugh, and asks to stick to the hard facts of his immediate role, as chairman of the Vatican’s Financial Information Authority. The only personal detail he will admit is that he is Catholic. He concedes that getting the Vatican’s finances back on track involved unconventional thinking. "You would not think a priest and money laundering should be linked, so you can’t expect there is a lot of expertise on that," Bruelhart says, deadpan. "From the beginning it was a step-by-step approach to reveal risks and vulnerabilities." His role is also a sign of lay experts taking over administrative functions in the Holy See, another change under Pope Francis. The European Union’s Moneyval, the anti-money laundering monitoring body, had decreed that an early iteration of the Financial Information Authority, created by Pope Benedict in 2010, lacked enough legal powers and independence to monitor and sanction the Vatican’s financial activities. Those comprise its bank, the Institute for Religious Works and its treasury, the Administration of the Patrimony of the Apostolic See, or Apsa. International banks that served as counterparties to the Vatican state, sending its monies to missionaries and dioceses around the world, began to block transactions. In early 2013, in a peak tourist period, Vatican City’s ATMs were suspended. A second front soon opened up over what Bruelhart considers the Holy See’s other weak point. The heavy use of cash within its walls is ostensibly as a result of donations, but is a red flag for money laundering risk. Italian police arrested a silver-haired cleric, Nunzio Scarano, nicknamed "Monsignor Cinquecento" after the €500 notes he carried around. Prosecutors alleged the priest was using the Vatican bank to launder money for businessmen. The cleric, who was an accountant at Apsa, is standing trial and denies wrongdoing. Bruelhart describes that period as "fascinating". As a financial crimes troubleshooter, he acknowledges this time of damaging headlines in the global media provided leverage "to change the institutional framework". HIS role was to create a tailor-made regulatory system for the Vatican state, acceptable to international authorities. It would have a genuinely independent regulator reporting in effect to Pope Francis, as head of the Holy See. "For a lay person, I felt it was my job, my obligation, to be very transparent internally and to explain why you do this or that, and put in a clear context what the consequences are if (the Vatican’s senior clergy) failed to do that." International hires have boosted his team of about a dozen at the Financial Information Authority. Language skills and expertise were needed as the Vatican rebuilt relationships with regulators and governments, and took a forensic look at account holders. Hundreds of accounts have been shut as they were found to flout the Vatican’s new, tougher financial rules. Within months of Pope Francis’s arrival, he had effectively sided with Bruelhart. He sacked the five-strong board of the Financial Information Authority, all Italians, and appointed international replacements. "It is less about Italian networks and more about expertise," says Bruelhart of the new board and statute that gave the Financial Information Authority tougher powers and independence to dig out financial abuses. In a sign of its impact, the authority has queried 355 suspicious transactions since Bruelhart’s arrival, compared with only one previously in the Vatican's history. Still there is pushback. Bruelhart agrees with Cardinal George Pell, former archbishop of Sydney, Australia, and now head of the Vatican’s new secretariat for the economy, who recently said there were still "small pockets of significant opposition" to change and reform. More tightening up is needed to reduce the risk of illicit monies passing through the Vatican, Bruelhart says. "We are not super good yet. Where we have change, not everyone is going to be happy. This is normal. We are doing this to build a system and get people on board. We are doing this to make a difference."
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