Vatican bank is focus of money-laundering probe
The institution is suspected of failing to disclose the source of $30 million that was being transferred.
In another blow to the Holy See, Italian authorities have begun investigating the top two officials at the Vatican bank on suspicion of violating money-laundering rules and have frozen $30 million of the bank’s assets, news reports said Tuesday.
The Vatican, already battered by a scandal over priestly sexual abuse, expressed “puzzlement and amazement” at the allegations and said it was committed to financial transparency.
The two officials under investigation were identified by news media as Ettore Gotti Tedeschi and Paolo Cipriani, the chairman and director general, respectively, of the Institute for Religious Works, popularly known as the Vatican bank. It is responsible for managing the Holy See’s funds, the pension system of its employees and assets earmarked for charity.
The bank, a private entity, is suspected of failing to identify the source of $30 million that it was transferring to a branch of American financial giant J.P. Morgan in Frankfurt, Germany, and to the Italian institution Banca del Fucino, according to Italy’s ANSA news agency.
Italian law requires that the identity of account holders be made readily available to financial regulators. Magistrates in Rome initiated the investigation of the Vatican bank out of concern that it failed to adhere to these rules, ANSA reported.
Authorities then froze $30 million in the bank’s funds as a precautionary measure.
The Vatican said it was surprised by the investigation because its bank had been in discussions with global financial bodies on how to join the worldwide “white list” of institutions that conform to clean banking standards.
“The authorities of the Holy See have long been known for the goodwill they have shown in the transparency of financial operations of the Institute for Religious Works,” the Vatican said in a statement, adding that it maintained “utmost confidence” in Gotti Tedeschi and Cipriani.
Italy’s RAI television network quoted Gotti Tedeschi as saying he was “humiliated and mortified” by the investigation.
The banker, who has headed the Vatican’s financial arm since last year, is known to be a member of the conservative religious group Opus Dei and is an outspoken advocate of ethical financing.
News of the investigation comes as the Vatican tries to tout the success of a justcompleted four-day visit by Pope Benedict XVI to Britain and as it grapples with an abuse scandal that continues to produce more allegations of sexual molestation by priests.
This is not the first time that the Vatican’s bank and its voluminous finances
have been embroiled in controversy.
In the 1980s, the bank made headlines over its involvement in one of Italy’s biggest fraud cases, the collapse of Milan’s Banco Ambrosiano, which lent more than $1 billion to companies in Central America that existed mostly on paper. The Vatican bank had backed the loans with letters of credit.
The head of Banco Ambrosiano, Roberto Calvi, who was known as “God’s banker” because of his ties to the Vatican, fled to England and was found hanging from a bridge in London in 1982.
The Vatican bank insisted that it had done nothing wrong, but agreed to pay $250 million to Ambrosiano’s creditors.
The then-president of the Vatican bank, American Archbishop Paul Marcinkus, was charged as an accessory in the bankruptcy scandal but was never prosecuted. He died four years ago.
HOLY SEE: Police officers are on duty in front of St. Peter’s Square. The Vatican expressed “puzzlement and amazement” at the allegations about its bank and the “utmost confidence” in the facility’s top two executives.