Is the Vatican Bank finally fighting money laundering for real?

The Week
The Vatican has been trying to shed its image as a murky financial center since at least 1982.

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The Vatican has been trying to shed its image as a murky financial center since at least 1982.

The Holy See's new financial watchdog just announced six incidents of possible monetary malfeasance from last year

Rene Bruelhart, the head of the Vatican's new Financial Intelligence Authority, disclosed Wednesday that he had found six incidents of possible money laundering in the Vatican Bank from last year — marking the first step in what may be a new era of transparency for the scandal-stained institution.

The Vatican Bank, officially called the Institute for Religious Works (IOR), manages an estimated $5 billion in assets for religious orders and Catholic charities. A private entity, its inner workings have long been shrouded in secrecy. In 2012, following investigations of money laundering and probes into the behavior of the top brass, Forbes called the IOR "the most secret bank in the world."

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The bank was founded in 1942 to safeguard and administer funds for Catholic organizations around the world, and got into trouble at the height of the Cold War, "when the Catholic Church was consumed by the threat of the Soviet Union," said TIME in a 2010 story about another Vatican probe. "In a sharply divided world, the Holy See found itself on the same side as the Mafia, whose Sicilian vote-buying operations propped up the Christian Democrats against the communists."

Then, in 1982, when Italy's second largest bank, Banco Ambrosiano, went bankrupt (allegedly due to mafia-related debt issues), the IOR was implicated as the bank's main shareholder. When Banco Ambrosiano's chairman, Roberto Calvi, was found hanging from London's Blackfriar's Bridge, his pockets stuffed with bricks and cash — a likely mafia murder that remains untried — the IOR's reputation took a beating. "The Vatican has been trying to shed its image as a murky financial center since," says the Financial Times.

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But reforms were slow moving until late 2010, when Italian authorities seized $30 million from the Vatican Bank and placed the bank's president and chief executive under investigation for alleged violation of anti-money-laundering rules. Pope Benedict XVI established the Financial Intelligence Authority to help bring the bank up to international standards for preventing money laundering and terrorism financing. In September 2012, the Vatican hired Liechtenstein's former top anti-money-laundering expert, the experienced and rather dashing Rene Bruelhart, to whip the Vatican Bank into shape.

Bruelhart's announcement Wednesday that his agency found six suspicious transactions — two of which were serious enough to pass to the Vatican's prosecutor — represents something of a new leaf for the institution.

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"There is a lot of internal support on this and it is very clear that [the Vatican] will be committed to pursue the initiated path," Bruelhart said, adding that the bank's challenges "are several and require perseverance."

Bruelhart has yet to publicly offer more details on the six incidents in question, though he did say that his team would come up with new laws and screening procedures to prevent future bad behavior.

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