By Cian Molloy - 29 April, 2018
This month, the former head of the Vatican Bank Angelo Caloia goes on trial charged with embezzling €50m from the sale of church Vatican property.
The Vatican’s financial watchdog says that there has been significant progress made in providing the Holy See with “a robust reporting system” that would help avoid illegal financial activity.
As a reforming pontiff, one of Pope Francis’s earliest initiatives in his papacy was the foundation of the Financial Information Agency, commonly known by its Italian initials AIF. This agency was established in 2013, the year the Argentinian was made pontiff, and the AIF has worked to cooperate with counterparts across the globe to combat money laundering, tax evasion and other illicit financial activities.
Unfortunately, the Vatican has been hit repeatedly by financial scandals, including the involvement of its bank, the Istituto per le Opere de Religione (IOR) with the Franklin National Bank, which collapsed in 1974 with Banco Ambrosiano, which collapsed in 1982 amid allegations of an illegal Masonic conspiracy, arms dealing and murder.
More recently, the 2012 Vatileaks affair revealed that the Holy See had wasted millions of euro over-paying contractors, €500,000 of funds was donated to the Vatican’s Bambino Gesu Pediatric Hospital to pay for renovations to a cardinal’s penthouse apartment and, this month, Angelo Caloia, who was head of the IOR Vatican bank for 20 years, is due to go on trial, charged with embezzling €50m from Vatican property sales.
To combat abuses such as these, a new Vatican law enacted last November requires all Vatican-registered charities and foundations to report suspicious transactions to the AIF or face sanctions of up to €20,000.
At the publication of the AIF’s annual report this week, the agency’s president René Brulhart said there has been a progressive decline in the number of “Suspicious Activity Reports” (SARs) needing investigation and signs of growing cooperation among all organisations working for the Holy See.
“Last year, 2017, has been a year of consolidation and normalisation of our institutional activities,” he said. There has been “consolidation of the measures taken to establish an effective regulatory framework and its full and sustainable implementation and normalisation of the reporting system, which is considered to be robust.”
In 2017, 150 SARs were filed with AIF in comparison with 207 in the previous year. “Such a tendency is positive because in parallel the quality of the reports increased, showing a growing awareness and strengthening of the control functions of the reporting subjects,” said Tommaso Di Ruzza, a director of the AIF.
“International cooperation is a key element of the activity of AIF,” he added, saying that last year the AIF signed 19 memoranda of understanding (MOU) with counterparts in foreign jurisdictions and exchanged information in 268 cases.
Furthermore, the regulatory framework has been further strengthened, in particular with the introduction of Regulation n. 2, which sets the rules in regard to the data and information accompanying transfers of funds and the technical requirement for credit transfers and direct debits in Euro.
To date, since 2013, the AIF has signed MOUs with supervisory authorities and financial intelligence units (FIUs) in Albania, Andorra, Argentina, Armenia, Australia, Austria, Belgium, Brazil, Canada, Cape Verde, Chile, Colombia, Cuba, Cyprus, Ecuador, Estonia, France, Germany, Ghana, Gibraltar, Guernsey, Hungary, India, the Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Luxembourg, Malta, Moldova, Monaco, the Netherlands, New Zealand, Norway, Panama, Paraguay, Peru, Poland, Portugal, Romania, Russia, San Marino, Slovenia, South Africa, Spain, Switzerland, Taiwan, the United Kingdom and the United States of America. Interestingly, the Republic of Ireland isn’t on that list.