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Vatican Bank ready to resume relations with Italy

IOR cites progress made in money-laundering measures

22 January, 19:01
Vatican Bank ready to resume relations with Italy (By Denis Greenan) (ANSA) - Rome, January 22 - In another sign of the reforms ushered in by Pope Francis, the Vatican bank said Wednesday that it was ready to resume normal relations with Italy after making progress in measures to prevent money laundering and other financial crimes.

The image of the bank, officially called the Institute for Religious Works (IOR), has been hit by a series of scandals over the years.

Italian banks effectively stopped dealing with the IOR in 2010 after the Bank of Italy ordered them to enforce strict anti-money laundering criteria to continue working with it.

From January 1 to February 12 last year the Bank of Italy froze all credit-card and ATM transactions inside the Vatican City over its failure to fully implement international anti-money-laundering standards. The Vatican has made several reforms to introduce greater financial transparency and fight money laundering since Francis was elected pope last year. In December the Council of Europe's Moneyval agency, a monitoring group of financial experts, praised the Vatican's progress, as it seeks to get on the 'white list' of countries with strong credentials on combatting financial crime. But it also stressed that more work needed to be done.

"The IOR looks forward to a resumption of full interaction with Italian financial institutions pending review by Italian regulatory authorities of the Holy See/Vatican City State's anti -money laundering provisions," read a IOR press release on a status report on the reform process by its Board of Superintendence.

"The IOR has implemented further reforms to enhance its overall risk management function and to allow for a high level of transparency for the overall process".

Vatican watchers said the statement might herald a formal deal with the Bank of Italy. In June Francis nominated a pontifical commission to make proposals on the future of the bank.

"I would like to thank our employees who have responded with great dedication and professionalism to ambitious targets set by IOR's management in the past year," said IOR President Ernst von Freyberg.

The latest scandal to hit the world's most secretive bank - tainted by scandals dating back to the 1980s involving US Cardinal Paul Marcinkus and 'God's Banker' Roberto Calvi, who is thought to have been killed by the Mafia - involves two probes into a prelate from the city of Salerno near Naples, Monsignor Nunzio Scarano.

Scarano was arrested last year for allegedly trying to smuggle millions of euros into Italy.

He faced fresh legal trouble this week after being issued a new arrest warrant related to a separate money-laundering probe.

Scarano, the former head of analytic accounts at the Holy See's asset-management agency APSA, is being investigated for involvement in the laundering millions of euro through accounts at IOR.

The money, much of which investigators say came from offshore companies controlled by rich ship-builder friends, the Roman D'Amico family, was allegedly used to buy property, set up companies and pay off a mortgage.

Another priest, Father Luigi Noli, was also put under house arrest, while a notary, Bruno Frauenfelder, was temporarily banned from doing his job.

In total, 52 people have been placed under investigation in connection with the probe.

IOR said Tuesday it had frozen all accounts linked to Scarano on the orders of a Vatican tribunal last July.

Scarano was already under house arrest after being detained in June on suspicion of planning to elude customs with 20 million euros in cash for the D'Amico family.

He has denied charges that he conspired with a former Italian spy and a financial broker in a failed bid to bring the money from Switzerland to Italy.

On Tuesday the lawyer acting for Scarano said his client had fallen into "a state of depression" after receiving the new arrest warrant and that he would make a request for him to be visited by his psychiatrist.

The Italian media ran pictures of Scarano's lavish apartments and other luxury assets, reportedly worth millions of euros.

Scarano's lawyer insisted Wednesday his client "gave all the money to charity".

The Scarano probes are part of a wider investigation into alleged shady transactions at IOR, in which former president Ettore Gotti Tedeschi and his former No.2 were placed under investigation in connection with suspected money laundering.

But Vatican experts say the bank is finally beginning to shake off its reputation as an offshore bank in the centre of Rome allegedly used by high-living prelates and well-connected politicians to funnel off tax-exempt cash.