Vatican on the watch list as a possible centre for money laundering from criminal activity

A report of the American State Department’s International Narcotics Control Strategy has for the first time identified the Vatican as a possible centre for money laundering from criminal activity.

The report lists the Vatican as one of 68 countries including Yemen, Algeria and North Korea, describing it as a “country of concern” for money laundering or other financial crimes.

According to US officials, the Vatican is on the watch list because of the “huge amount of cash” that flows into the tiny city state and also because it was still unclear how effective anti money laundering legislation introduced last year by Pope Benedict XVI had been.

The news comes just weeks after a series of leaked documents from within the Vatican and which were dubbed “Vatileaks”, revealed allegations of corruption and money laundering within the Holy See and which forced officials into issuing a series of denials.

The documents said that despite Pope Benedict XVI signing a new anti money laundering law to make it more difficult for illegal funds to be recycled through Vatican accounts, there was a massive loophole which made it impossible to take action against any offence committed before its introduction on 1 April 2011.

Prosecutors in Rome are currently investigating two transfers totaling 23 million Euros from the Vatican Bank, or the Institute of Religious Works to give it its proper name, to two smaller banks.

The transactions took place in September 2010 and as a result the head of the Vatican Bank, Ettore Gotti Tedeschi and his chief executive Paolo Cipriani, were placed under official investigation by Rome prosecutors and the 23 million Euros was also seized as part of the investigation.

Officials were tipped off about the two suspicious transactions by the Bank of Italy, as the Vatican Bank was said to have “failed to disclose fully” all the information it was supposed to regarding the transactions as per international banking laws.

Investigators involved in the case said they have met with “a deafening silence” as they try to get to the bottom of the case, with requests for information being constantly dodged – at the time the Vatican said it was “perplexed and astonished” at the allegation and gave its full backing to Gotti Tedeschi and Cipriani.

Author Gianluigi Nuzzi, who wrote a bestselling book on financial scandals at the Holy See called “Vatican Spa” said: “This news is inevitable and the Vatican really needs to follow international rules and ensure that it is transparent when it comes to banking transactions.

“The Vatican says that it is but it is still not on the internationally recognised white list of countries and until it is there will always be suspicion surrounding its financial activities. I understand inspectors were at the Vatican a few months ago and would not be surprised if the State Department’s announcement was connected to this.

“There are ongoing investigations against the Vatican Bank but every time prosecutors try and ask a question they are met with at best half answers or at worst and more often the case, complete silence.”

A report of the American State Department's International Narcotics Control Strategy has for the first time identified the Vatican as a possible centre for money laundering from criminal activity

It also emerged last month that prosecutors in Rome have also placed four priests under investigation were aged 37, 49 and 62, with the oldest being Father Evaldo Biasini, 85, who has been given the nickname “Father Cashpoint” by detectives.

Evaldo Biasini is alleged to have laundered hundreds of thousands of Euros belonging to a corrupt businessman through accounts he opened for him at the Vatican Bank and was allowed to “keep a percentage” of the money as payment.

Meanwhile another of the priests is said to have acted as a guarantee for the transfer of 300,000 Euro to an account in Rome by a woman identified as “Maria Rossi” which later turned out to be a false name.

It is not the first time that the Vatican Bank has been linked to money laundering and criminal activities – in 1982 it was involved in a huge international scandal when its then governor, larger than life American Archbishop Paul Marcinkus, was indicted over his involvement with the collapse of Italy’s then largest private bank, Banco Ambrosiano.

Banco Ambrosiano’s chairman Roberto Calvi, was found hanged under London’s Blackfriars Bridge, with bundles of cash and bricks in his pockets and at the time his death was recorded as suicide but prosecutors in Rome later said he had been murdered by the Mafia after a bungled money laundering attempt through the Vatican Bank.

Roberto Calvi, was known as God’s Banker because of his ties to the Vatican and was also known to Paul Marcinkus but the cleric refused to answer questions always claiming diplomatic immunity and he died six years ago taking the secrets of what he knew to the grave.