Vatican City’s secretive bank is urged to increase transparency

BY newsdesk  December 6, 2013 at 4:30 PM EDT

Financial pressures rippling out from the 2008 global financial crisis have put pressure on the Vatican to operate its bank with more transparency. Photo by Getty Images

An 11-month investigation by the Financial Times into the Vatican’s bank reinforced what European officials have found: that for years the institution has operated with little documentation and does 25% of its business in cash — practices that raise suspicions of money-laundering.

Several financial professionals who have dealt with the Vatican told the FT on condition of anonymity that the bank, known formally as the Institute for Religious Works, doesn’t operate as a typical bank. It has a small staff of 112 people who seemed “unversed in customer due diligence,” the report said. A complex system of proxies allows representatives to perform transactions on behalf of account holders.

In July, Peter Sutherland, the former attorney-general of Ireland and currently the non-executive chairman of Goldman Sachs International, met with the Pope’s council of cardinals and encouraged them to push for more transparency in the bank’s dealings.

Past and present Vatican officials confirmed to the FT that the bank is sometimes used to channel cash secretly to places in need, such as Christian groups in Cuba or Egypt.

A senior cleric, Monsignor Nunzio Scarano, was arrested in June for allegedly acting as an intermediary on Vatican transactions, making them difficult to trace. The prosecution says he suspiciously transferred money on behalf of people he knew, including a Neapolitan ship-owning family. His trial begins in Rome on Dec. 13.

Pope Francis set up two commissions of inquiry last summer to investigate the finances of the Vatican bank and look for ways to cut waste and improve transparency.