Vatican’s new financial law
takes effect today
April 1, 2011
The new Vatican norms on the prevention and fight against money laundering and financing terrorism entered into law Friday, April 1st. It was first issued on December 30 together with an Apostolic Letter Motu Proprio of Benedict XVI on the same topic.
In a statement released Friday, Press Office director Fr Federico Lombardi notes "The law, as well as the Motu Proprio - is an event of great normative importance and has a far-reaching moral and pastoral significance”.
Offices and agencies required to comply with the law include the IOR, (Institute for Religious Works), and other dependent and associated organisms of Vatican City State or the Holy See.
To ensure compliance with the new measures, Pope Benedict also created the AIF, the Financial Information Authority, an autonomous and independent body.
Among the regulations coming into effect today concerns the transportation of money in cash. The new rule "does not forbid carrying sums greater than 10,000 (ten thousand) euro when entering or leaving Vatican City State, but it does stipulate that they be declared to the offices and organisations obligated by the anti-money laundering legislation, where an operation is to be carried out, or to the Corps of the Gendarmerie at the entrance to the State. ... The failure or partial failure to meet this obligation to declare will be punished with an administrative sanction".
Finally. Fr Lombardi said that "last month, Marcello Condemi and Francesco Di Pasquale, respectively substitute president and director of the Financial Information Authority, participated on behalf of the Holy See and of the Financial Information Authority itself at the third meeting on the application of the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism. The convention was signed in Warsaw, Poland, in 2005".
Condemi and Di Pasquale "also had the opportunity to meet with members of MONEYVAL, an office of the Council of Europe charged with examining anti-money laundering and anti-terrorism laws, including those of the Holy See.
In coming days they will attend the thirty-fifth plenary assembly of MONEYVAL in Strasbourg, during which attention will also be given to the Holy See's proposal to submit its own anti-money laundering and anti-terrorism measures for examination by that office.
The following is a biased and extremely skeptical report - beginning with its headline - that is almost offensive in its presentation. Worse, it deliberately glosses over the IOR scandal in the 1980s that was a far greater blot on the Vatican than the unproven accusations of money-laundering that appear to be the brunt of current concerns. Nor does the writer seem to appreciate the unprecedented, historic and bold nature of Benedict XVI's far-reaching reform!
Vatican seeks to clamp ddwn
on its finances
by Stacy Meichtry
VATICAN CITY, March 31 -
The Vatican is scrambling ahead of a Friday deadline to finalize new rulesfor how the Holy See will monitor the movement of funds in and out of Vatican walls and punish money launderers.
[How does the reporter know from 'scrambling'??? The Vatican has had months to work on the rules since the law was signed last year!]
Pope Benedict XVI late last year bowed to the demands of the international financial community and said the Vatican would create a watchdog to police its bank's opaque finances and bring to justice anyone who commits financial misdeeds on Vatican territory.
As the watchdog formally comes into power on Friday, regulators and banks in Italy and abroad will be watching closely to see if the new measures have teeth.
Among them, officials have drafted a measure that would require all Vatican departments to inform the watchdog when they transfer funds inside the Vatican or abroad, disclosing the sender, recipient and nature of the transaction, according to a person familiar with the matter. It isn't clear if that will be introduced along with other rules on Friday, the person said.
Under a rule that will be unveiled Friday, people entering Vatican City will for the first time be required by gendarmes to declare whether they are carrying large sums of cash or other liquid assets, the person said.
The Vatican's financial system has long functioned with few of the strict regulations that govern many of the world's banks. At the heart of the Holy See's crackdown is the Vatican bank, known as the Institute of Religious Works [IOR, from its italian name, Istituto delle Opere Religiose],
The bank was a discreet channel for getting money to Catholics living under oppressive Soviet regimes during the Cold War.
In the 1980s, it became embroiled in a fraud scandal involving Italian bank Banco Ambrosiano-- a case that grabbed headlines when the Italian bank chief was found hanging from Blackfriars Bridge in London, an incident that remains a mystery. The Vatican refused to allow its top bankers to be questioned by Italian prosecutors.
[It's obviously inopportune to mention at this time, but it is relevant to state that the man in charge of IOR at the time - and continued to head it until he retired in 1989) - was Archbishop Paul Marcinkus, a trusted and longtime aide of John Paul II, and that IOR had to pay some $250 million in restitution for the financial damages caused to firms and individuals by the whole scandal. It is irresponsible for the reporter of a major business paper to omit these facts in providing the background to the reforms instituted by Benedict XVI.]
In late 2009, however, the Pope
[BENEDICT XVI - not the one who refused to allow Vatican bankers to be questioned!] hired an economist, 66-year-old Ettore Gotti-Tedeschi, to run the Vatican bank, with a mandate to shake up its secretive practices.
The modern Vatican has little experience in bringing criminals to justice. In 1929, Italy and the Vatican signed a pact in which Rome recognized the Holy See's sovereignty but
allowed popes to shield Vatican officials from investigations and prosecutions by foreign governments by invoking diplomatic immunity.
[Have to check out if the provision is as wide-ranging as the reporter claims.]
There is no prison inside the world's smallest state. Under the new rules, the Vatican will send people convicted by Vatican courts to prisons in Italy, said the person familiar with the matter.
Without a full-fledged criminal-justice system in place, the Vatican's financial overhaul faces an uphill struggle, some analysts say.
"The adequacy of these [new Vatican] laws
has not yet been assessed,"
[Of course not, moron! It is just taking force today! Why not wait for at least a year before judging it????], , says Rick McDonell, executive secretary of the Paris-based Financial Action Task Force, or FATF, which sets anti-money-laundering standards and encouraged the Vatican to overhaul its financial system.
Soon after Mr. Gotti-Tedeschi's appointment, the Bank of Italy started looking into the Vatican bank's ties with Italian banks, reporting suspicious transactions to Italian prosecutors.
The Vatican bank doesn't have branches outside Vatican walls, and for decades Italian banks processed transactions on its behalf without demanding any information about Vatican bank clients. This allowed those clients -- ranging from Swiss Guards to Vatican cardinals -- to funnel funds in and out of Italy's banking system anonymously.
In 2010, the Bank of Italy warned that commercial banks shouldn't carry out Vatican bank transactions unless it disclosed information about the identity of its clients.
According to court documents, Italian lenders such as Intesa Sanpaolo SpA, UniCredit SpA and Credito Artigiano SpA threatened to stop -- a move that would have effectively paralyzed Vatican business, from investments in sovereign bonds to charity funding and Vatican employees' salary payments. The banks declined to comment.
"The water was already up to our throats," Mr. Gotti-Tedeschi later told prosecutors, according to a court transcript.
Mr. Gotti-Tedeschi needed the Vatican bank to comply with international financial standards defined by the Financial Action Task Force and the Organization for Economic Cooperation and Development.
When he met with the groups in Paris, however, officials warned him the Vatican bank was skirting international money-laundering rules and needed a regulatory overhaul, according to people present.
In September, Italian prosecutors put Mr. Gotti-Tedeschi under investigation because the bank allegedly violated Italy's anti-money-laundering laws by not disclosing the nature of a 23 million euros ($32 million) transfer of Vatican funds from Credito Artigiano to Vatican accounts at two other banks. Prosecutors ordered the funds be frozen.
The Vatican and Mr. Gotti-Tedeschi said there was nothing untoward about the transfer. But in a break with custom, the Pope agreed to let Mr. Gotti-Tedeschi be questioned by Italian prosecutors. The probe is continuing.
Knowing only what I read in news reports and commentaries about the affairs of IOR, one gets the impression that IOR was left completely to the discretion of its officials even after the 1980s scandal, and that the oversight committee composed of cardinals named by the Pope(s) were rather perfunctory in their oversight - at least until Benedict XVI completely overhauled the 'old order' in 2007.
God knows how the late Mons. Marcinkus explained the 1980s scandal to John Paul II, but he remained the IOR head for several more years, so obviously, he convinced the Pope. At the same time, surely, one cannot imagine that Popes simply turned a blind eye or preferred not to know the details of IOR's activities, because in doing so, they would be complicit in wrongdoing. Perhaps, too, IOR's record is not as sinister as everyone make it seem to be, especially since all of its critics also underscore that IOR's activities have always been shrouded in secrecy, and secrecy breeds unbridled suspicion!
In any case, the IOR story is one that the Vatican does need to explain to the world because it is too reminiscent of medieval intrigue and powerplays that have no room in today's world of obligatory (or so it should be) 'transparency' (a fancy term for honesty).
You might want to read Sandro Magister's lengthy exposition of this issue lastweek:
chiesa.espresso.repubblica.it/articolo/1347168?eng=y
[Modificato da TERESA BENEDETTA 01/04/2011 18:05]