"Impossible to Launder Money" at Vatican Bank, Says Chairman

Banking & Finance
May 12, 2016

http://www.businesstimes.com.sg/banking-finance/impossible-to-launder-money-at-vatican-bank-says-chairman

A drive to tighten financial governance at the Vatican bank after years of alleged wrongdoing has made it "impossible to launder money" there, its chairman said on Thursday. PHOTO: REUTERS

A drive to tighten financial governance at the Vatican bank after years of alleged wrongdoing has made it "impossible to launder money" there, its chairman said on Thursday.

The bank, which is called the Institute for the Works of Religion (IOR), has toughened its rules and closed thousands of accounts since 2012 to break from the murky management of the past.

The IOR's mission is to manage money for the Roman Catholic Church. But for decades it let Italian citizens hold accounts, which law enforcement officials said helped them launder money and evade taxes.

It holds 5.8 billion euros (S$8.33 billion) in assets for clients around the world - primarily congregations, dioceses and other Catholic institutions.

Chairman Jean-Baptiste de Franssu, who took over in 2014 after Pope Francis was elected with a mandate to make the Vatican administration transparent, said the rules were now"extremely strict".

"Anyone who would be tempted to use an account in an institution to launder money, the last place he would want to come to is IOR," Mr Franssu told Vatican Radio.

Cleaning up the IOR has been a sensitive issue facing Pope Francis in his bid to overhaul the labyrinthine Vatican bureaucracy after years of scandal. Progress has been made, but suspected criminals should be pursued more aggressively, European watchdog Moneyval said last year.

Mr Franssu said the bank had closed 4,935 accounts since former Pope Benedict launched the clean-up in 2012. Most of these were either dormant for decades or contained tiny amounts, or their holders did not meet the criteria for clients.

He warned against thinking that all those accounts had been closed because they were "suspicious", adding that all doubtful accounts had been reported to the competent authorities.

The new rules strictly regulate which clients can open accounts, all staff have been given training, and the Vatican is drawing up tax agreements with various countries, Mr Franssu said.

Britain was hosting an international anti-corruption summit in London on Thursday, although it was not clear if any representatives from the Vatican were attending the event.

Last year, the Vatican signed an agreement to share financial information with Italy, effectively relinquishing banking secrecy.

The abuses of the past happened because the IOR is a "community of human beings" and because of "the absence of rules, of a system and a series of strict norms", bank Director General Gian Franco Mammi told Vatican Radio.

In a statement on Thursday, the bank said net profit dropped 77 per cent in 2015 to 16.1 million euros, mainly due to lower income from securities trading due to global economic weakness, and a provision for tax payments to foreign countries.

If the bank looks for more equity investments in the future, it will ensure these comply with Pope Francis's message of social responsibility, Mr Franssu said, like the exhortation to save the planet contained in last year's encyclical "Laudato Si".