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The profit of the Vatican bank plunged in 2013 largely due to a clean-up process which has seen it end relationships with 3,000 customers.
Officially known as the Institute for Religious Works, the bank reported a 2.9 million euro (3.9 million) profit for 2013, down from 86.6 million euros ($117.8 million) in 2012.
Most of its losses came from the winding up of investments made before its reform program began.
Without these, it said profit would have been 70 million euros.
Pope Francis has sought to stamp out corruption and other abuses at the Vatican bank, which handles funds for the Catholic Church (photo Bloomberg)
Pope Francis has sought to stamp out corruption and other abuses at the Vatican bank, which handles funds for the Catholic Church.
He pledged to clean up the bank following accusations of money laundering and a lack of due diligence which allowed non-religious, and even crony, businessmen to hold accounts.
Between May 2013 and June 2014, outside experts combed through all the bank’s accounts in what the Vatican said was a “systematic screening of all existing customer records”.
As a result, it said it had terminated 2,600 “dormant” accounts which had seen no activity for a long time, as well as 396 customers who didn’t meet the criteria for doing business with the bank.
It said a further 359 customer accounts which didn’t meet its criteria were in the process of being terminated.
“I repeatedly said that I would proceed with zero tolerance for any suspicious activity. We have carried out our reforms in this spirit,” said the bank’s President, Ernst von Freyberg.
Ernst von Freyberg’s statement came ahead of an announcement on Wednesday which is expected to detail further expected re-structuring at the bank.
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Pope Francis has stepped up the fight against corruption at the Vatican by strengthening supervision of financial transactions at its internal bank.
The Pope issued a decree designed to combat money-laundering and prevent any financing of terrorism.
It is the latest move to stamp out abuses at the Vatican bank, which handles funds for the Catholic Church.
Pope Francis recently set up a commission to investigate the bank and report back to him personally.
Last month the Vatican froze the account of a senior cleric, Monsignor Nunzio Scarano, suspected of involvement in money-laundering.
Monsignor Nunzio Scarano and two others were arrested by Italian police in June on suspicion of trying to move 20 million euros ($26 million) illegally.
Pope Francis has stepped up the fight against corruption at the Vatican by strengthening supervision of financial transactions at its internal bank
Pope Francis’ number one priority this summer is to sort out the financial mess at the Vatican bank and a parent body which looks after the financial assets of the Holy See.
The new decree is intended to tackle “money-laundering, the financing of terrorism and the proliferation of weapons of mass destruction”, the Vatican said.
It sets up a financial security committee to coordinate the anti-corruption effort.
Church spokesman Federico Lombardi said the decree would help the Vatican resist “increasingly insidious” forms of international financial crime.
A French-based financial watchdog, Moneyval, has been carrying out a review of the Vatican bank’s operations.
It found that the bank had not always exercised due diligence.
The Vatican bank, which is known officially as the Institute for Religious Works, handles the payroll for some 5,000 Vatican employees.
It also handles the funds for the central administration of the Catholic Church and holds the accounts of cardinals, bishops, priests, nuns and religious orders around the world.
It does not lend money and has assets worth $8.3 billion (6.2 billion euros).
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Monsignor Nunzio Scarano, a senior Italian cleric, has been arrested in connection with an inquiry into the Vatican bank scandal over allegations of corruption and fraud.
Monsignor Nunzio Scarano works in the Vatican’s financial administration. A secret service agent and a financial broker have also been arrested.
They are suspected of trying to move 20 million euros illegally into Italy.
Pope Francis ordered an unprecedented internal investigation into the bank’s affairs in the wake of recent scandals.
Monsignor Nunzio Scarano has been under investigation by Italian police for a series of suspicious transactions involving the recycling of a series of cheques described as church donations through the Vatican Bank.
Monsignor Nunzio Scarano has been arrested in connection with an inquiry into the Vatican bank scandal over allegations of corruption and fraud
Earlier this month, the pontiff named a trusted cleric to oversee the management of the bank, which has been beset by allegations of money-laundering.
Officially known as the Institute for the Works of Religion, the bank is one of the world’s most secretive. It has 114 employees and $7.1 billion (5.4 billion euros) of assets.
Pope Francis has given the commission carte blanche, bypassing normal secrecy rules, to try to get to the bottom of scandals which have plagued the bank for decades.
Traditionally, the Vatican Bank has refused to co-operate with Italian authorities investigating financial crime on the grounds of the sovereign independence of the Vatican city state.
But Pope Francis has shown that he is now determined to get to the bottom of long-standing allegations of corruption and money-laundering by the bank.
The Institute for the Works of Religion was a major shareholder in the Banco Ambrosiano, a big Italian bank which collapsed in 1982 with losses of more than $3 billion.
Its chairman, Roberto Calvi, was found hanging from Blackfriars Bridge in London – in a murder disguised as a suicide. Roberto Calvi had close relations with the Vatican.
Pope Francis has set up a commission of inquiry to review the activities of the Vatican bank, following recent scandals.
Earlier this month, Pope Francis named a trusted cleric to oversee the management of the bank, which is known officially as the Institute for Religious Works.
The institution, one of the world’s most secretive banks, has been beset by allegations of money-laundering.
Vatican bank has 114 employees and $7.1 billion (5.4 billion euros) of assets.
Pope Francis has set up a commission of inquiry to review the activities of the Vatican bank
The new commission is tasked with ensuring the bank operates in “harmony” with the mission of the Church.
It is made up of Mary Ann Glendon, a Harvard law professor, and four senior clerics: Italian cardinal Raffaele Farina, French cardinal Jean-Louis Tauran, Spanish bishop Juan Ignacio Arrieta Ochoa de Chinchetru and US cleric Monsignor Peter Bryan Wells.
On June 15, Pope Francis appointed Monsignor Battista Mario Salvatore Ricca as the bank’s interim prelate – effectively his representative at the institution.
In February, German lawyer Ernst von Freyberg was named the bank’s new chairman, eight months after his predecessor was ousted amid a money-laundering inquiry.
His appointment was one of the last acts of Pope Francis’s predecessor, Benedict XVI.
Ernst von Freyberg set about instituting checks on the bank’s 19,000 accounts, which are mostly held by Vatican employees, charities, priests and nuns.
Pope Francis has taken his first major step towards reforming to the troubled Vatican bank, naming Monsignor Battista Mario Salvatore Ricca, a trusted cleric, to oversee its management.
The Vatican said Monsignor Battista Mario Salvatore Ricca had been approved as interim prelate of the Institute for Religious Work (IOR)s, as the bank is known.
Monsignor Battista Mario Salvatore Ricca currently runs a number of Church-owned properties.
The IOR, considered one of the world’s most secretive banks, has been at the centre of several scandals.
In February, German lawyer Ernst von Freyberg was named the IOR’s new chairman, eight months after his predecessor was ousted amid a money laundering probe.
The appointment was one of the last acts of Pope Emeritus Benedict XVI, who became the first Pope to resign in 600 years later that month.
In May, Ernst von Freyberg said he was instituting checks on the IOR’s 19,000 accounts, which are mostly held by Vatican employees, charities, priests and nuns.
Pope Francis named Monsignor Battista Mario Salvatore Ricca to oversee Vatican bank management
Although Monsignor Battista Mario Salvatore Ricca was nominated by Secretary of State Tarcisio Bertone, the Vatican announcement made clear that Pope Francis personally backed the appointment.
Monsignor Battista Mario Salvatore Ricca runs the hotel where the Pope is living while his official residence is renovated.
As the prelate of the IOR – a post that has been vacant since 2011 – Monsignor Battista Mario Salvatore Ricca will report to the five-member commission of cardinals that oversees the bank, attend board meetings and have access to information on its financial activities.
The IOR is currently seeking recognition from the Council of Europe’s anti-money laundering committee, Moneyval, that it is fully compliant with international standards on combating money laundering, tax evasion and terrorist financing.
Last year, Moneyval said the bank was making progress but needed to improve.
The bank’s rules for customer due diligence, wire transfers and suspicious-transaction reporting were insufficient, and it needed an independent supervisor, Moneyval added.
Founded in 1942, the Vatican bank has 114 employees and $7.1 billion of assets.
Pope Francis has appointed a group of cardinals to advise him on how to reform the Vatican’s often arcane bureaucracy.
The Catholic Church’s new leader chose eight cardinals and a bishop who between them represent nearly every continent, and only one of whom is currently a Vatican official.
The bureaucracy, or Curia, has been blamed for the Church’s hesitant response to sex abuse and other crises.
It is nearly 50 years since the Vatican’s last major reforms.
The cardinals who elected Pope Francis last month were strongly critical about basic failings of the Curia under Pope Emeritus Benedict.
Pope Francis has appointed a group of cardinals to advise him on how to reform the Vatican’s often arcane bureaucracy
The cardinals include two Europeans (from Italy and Germany), two from Latin America (Chile and Honduras), one from the US, one from Asia (India), one African and one Australian. An Italian bishop will act as secretary.
Announcing the appointments, the Vatican said Pope Francis had got the idea of forming the advisory body from meetings ahead of his election by cardinals last month.
Pope Paul VI undertook the last major reform of the Vatican bureaucracy in 1967.
The new group is to have its first meeting on October 1-3.
Earlier this week the pontiff met personally all 300 staff members of the Vatican’s secretariat of state, the body responsible for carrying out Church policies.
Some radical reforms are expected soon, although Pope Francis is moving cautiously given the complexity and sensitivity of Church government.
Scandals have included clerical sexual abuse, financial problems at the Vatican bank and the theft of documents from Pope Benedict’s desk.
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Pope Francis prepares to tackle some of the Catholic Church’s major problems and he starts with the Vatican Bank, which has been accused of laundering money.
The pontiff is starting with the bank as he plans to reform the Church into a model of austerity and honesty.
Pope Francis has spent the first weeks of his papacy officiating at services and demonstrating how true servants of God should be.
Those close to Pope Francis, speaking on the condition of anonymity, say that he is considering plans to remove the head of the Vatican Bank, Cardinal Tarciscio Bertone, who is the Vatican’s second-in-command and is largely blamed for failing to stop infighting and corruption within the Holy See.
The officials warned that it would take time to change the bank, or to close it, but that it could certainly happen. One official doubted the likelihood that it would close, but that instead it would undergo serious restructuring.
Pope Francis prepares to tackle some of the Catholic Church’s major problems and he starts with the Vatican Bank, which has been accused of laundering money
Pope Francis, the officials say, has also indicated that he plans to tackle a number of other issues including scandals involving the sexual abuse of children around the world. The actions of a small minority of individuals has tainted the reputation of the 1.2 billion member church. Sadly, those problems have been exacerbated by the failure of Church leadership to cooperate with local authorities and to protect children in some cases.
It is expected that Pope Francis will also deal with this issue quite definitively, although no specifics have yet been discussed.
In many ways, Pope Francis represents a serious coup for the Church. Many Cardinals have been upset with how the Italian Cardinals, which dominate the Curia, have been operating. Therefore, it makes sense that after much prayer and petition, God should choose a relative outsider of great piety and spirit to cleanse His Church.
Insiders say that Pope Benedict XVI left a carefully composed secret report for Pope Francis. That report supposedly contains secret documents and a frank assessment of the scandals facing the Church. They discuss troubles with the Vatican bank as well as the Vatileaks scandal in which secret documents were smuggled out of the Vatican by Pope Benedict’s butler, Paolo Gabriele.
Paolo Gabriele was sentenced to 18 months in prison but was later pardoned and released by Pope Benedict XVI before Christmas.
Meanwhile watchdog organizations will continue monitoring the Vatican Bank and report on its progress.
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Cardinals have begun voting to elect a new Pope at the Vatican’s Sistine Chapel.
The 115 cardinal-electors were locked in the chapel after swearing an oath of secrecy.
They will vote four times daily until two-thirds can agree on a candidate.
The election was prompted by the surprise abdication of Benedict XVI. There is no clear frontrunner to take over from him as head of the Roman Catholic Church.
The 85-year-old Benedict stepped down last month, saying he was no longer strong enough to lead the Church, which is beset by problems ranging from a worldwide scandal over child sex abuse to allegations of corruption at the Vatican Bank.
His resignation and the recent damage to the Church’s reputation make the choice of the cardinal-electors especially hard to predict.
They will weigh pressure for a powerful manager to reform the Vatican against calls for a new pope able to inspire the faithful, our correspondent adds.
At 16:30 local time on Tuesday, 115 cardinal-electors – all under 80, as those over 80 are excluded – entered the Sistine Chapel for the secret conclave to select Benedict’s successor, chanting the traditional Litany of the Saints.
Each man in turn stepped up and placed his hands on the Gospel to swear an oath in Latin.
Afterwards Msgr Guido Marini, papal master of ceremonies, called out the words “Extra omnes” – “Everybody out” – and the chapel doors were locked to outsiders.
From now on the cardinals will eat, vote and sleep in closed-off areas until a new pope is chosen.
Jamming devices in the Sistine Chapel should block all electronic communication and anyone tweeting would in any case risk being excommunicated.
Cardinals were now expected listen to a meditation by elderly Maltese Cardinal Prosper Grech before holding a first vote, after which their ballot papers will be burned.
The smoke that will drift out of the chapel’s chimney early in the evening is likely to be black – meaning no Pope has been elected.
Cardinals have begun voting to elect a new Pope at the Vatican’s Sistine Chapel
From Wednesday, two votes will be held each morning and afternoon – with ballots burned after each session – until one candidate attains a two-thirds majority (77 votes).
Then the smoke will be white, meaning the 266th bishop of Rome will have been chosen.
Earlier on Tuesday the cardinals attended a “Mass for the Election of the Supreme Pontiff” in St Peter’s Basilica.
In his homily, the Dean of the College of Cardinals, Cardinal Angelo Sodano, praised the “brilliant pontificate” of Pope Benedict and implored God to grant another “Good Shepherd” to lead the church.
He outlined the mission Catholics believe was given by Jesus Christ to St Peter – the first Pope – emphasizing love and sacrifice, evangelization and the unity of the church.
The speech was more measured in tone than the address given in 2005 by Cardinal Joseph Ratzinger before he became Pope Benedict, which featured a fiery attack on the “dictatorship of relativism”.
On Tuesday morning several cardinals took to Twitter to say goodbye to their followers before being cut off from the outside world.
“Last tweet before the conclave: May Our Father hear and answer with love and mercy all prayers and sacrifices offered for a fruitful outcome,” South African Cardinal Wilfrid Napier tweeted.
Benedict – now known as Pope emeritus – resigned on 28 February after eight years in office, citing ill health. He was the first Pope in six centuries to do so.
As Cardinal Joseph Ratzinger in 2005, he was the marked favorite ahead of the conclave and was elected pope after just four rounds of voting.
The vote for his successor is expected to take much longer.
After 10 general congregations open to all cardinals, regardless of age – at which 160 cardinals spoke of the issues facing the Church and the qualities needed by its next leader – no clear frontrunner has emerged.
“Last time around there was a man of stature, three or four times that of any other cardinal,” French Cardinal Philippe Barbarin told reporters.
“That is not the case this time around. Therefore, the choice has to be made among one, two, three, four… a dozen candidates.
“We still don’t really know anything. We will have to wait for the results of the first ballot.”
New York Archbishop Cardinal Timothy Dolan told his priests there was hope that a new Pope could be chosen by Thursday.
Candidates named as contenders include Cardinal Angelo Scola of Milan, Brazil’s Odilo Scherer, and Cardinal Dolan himself – though he told one interviewer anyone who thought he was in with a chance might be “smoking marijuana”.
Conclave in numbers
- 115 cardinal-electors
- Two-thirds – or 77 – need to agree on papal candidate
- Four votes per day, two in the morning and two in the evening
- Chosen candidate will be 266th Pope
- He will lead world’s 1.2 billion Catholics
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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.
