A Vatican Watershed in Transparency: Moneyval Verdict on Financial Practices Offers Criticism as Well as Praise

By Allen, John L., Jr. | National Catholic Reporter, August 3, 2012 | Go to article overview

A Vatican Watershed in Transparency: Moneyval Verdict on Financial Practices Offers Criticism as Well as Praise


Allen, John L., Jr., National Catholic Reporter


Given the Vatican's traditional obsession with secrecy and autonomy, the report of the first independent, secular evaluation of the Vatican on fmancial transparency made news less for how the Vatican scored than the fact that it took the test in the first place.

Results of the highly anticipated evaluation were released July 18 by Moneyval, the Council of Europe's anti-money-laundering agency.

It came against the backdrop of the ongoing Vatican leaks scandal, which has featured revelations of private letters to the pope two years ago by a senior official charging financial corruption and cronyism, as well as memoranda documenting internal debates over the powers of a new financial watchdog unit touted as the leading edge of reform under Pope Benedict XVI. Still other leaks have focused on the Vatican Bank, including rumors of secret encrypted accounts allegedly used by Italian VIPs to evade tax obligations and by the Italian mob to launder money.

Collectively, the leaks have created impressions in some quarters that the "bad old days" of Vatican facial scandals, which crested in the early 1980s with the bizarre hanging death of a Vatican-linked financier in London and a $240 million payout to settle claims from the collapse of an Italian bank, are back.

Especially in that climate, the Moneyval evaluation offered the Vatican a welcome dose of good news. In a nutshell, evaluators concluded that the Vatican "has come a long way in a very short period of time" toward compliance with accepted global standards of transparency, and that "there is no empirical evidence of corruption taking place within the Vatican City State."

That said, the verdict was a mixed bag, offering criticism as well as praise.

For instance, evaluators strongly urged independent supervision for the Institute of the Works of Religion, popularly known as the "Vatican Bank." The absence of such oversight, the report warned, "poses large risks to the stability of the small financial sector of the Holy See and Vatican City State."

The Vatican Bank has slightly more than 33,000 accounts, mostly in Europe, though also including dioceses and religious orders around the world, and controls an estimated $7 billion in assets.

Moneyval likewise raised concerns about the new fiscal watchdog launched by Benedict, called the Financial Information Authority.

According to the Moneyval report, the unit lacks adequate powers to carry out its duties, has not yet carried out any inspections or sample testing of files, and has received a surprisingly low number of reports concerning suspect transactions even allowing for the small size of the Vatican's financial sector.

Overall, Moneyval evaluates states based on 49 benchmarks of transparency. Four were judged nonapplicable to the Vatican, while it got passing grades on 22 and failing marks on 23. The Vatican was judged "compliant" or "largely compliant," the highest marks available, on nine of the 16 "key and core" standards.

Those results place the Vatican squarely in the middle of the global pack, with scores comparable to recent evaluations of Germany, Italy and the Czech Republic. As a result, the Vatican will not be assigned to Moneyval's "Compliance Enhancing Procedures" designed for problem states--as close as Moneyval comes to saying that a country "failed." Instead, the Vatican will be subject to the normal follow-up process for states seen as moving in the right direction.

The Vatican official who headed up the team working on the Moneyval evaluation, Italian Msgr. Ettore Balestrero, called the July 18 report "not an end, but a milestone in our continuing efforts," and said the Vatican takes "both the praise and the criticism with seriousness."

In particular, Balestrero pledged that the Vatican will issue new regulations shortly for the Financial Information Authority, giving teeth to its powers of oversight. …

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