November 01-2013
Investigators suspect that Iran may be using the Vatican’s own bank for the purpose of laundering money it cannot move through other European banks because of sanctions.
The Vatican bank refused to adhere to the banking rules of the European Union long before any sanctions were imposed on Iran. It did not wish to kowtow to EU bureaucrats. But the result has been a series of embarrassing scandals, which led the previous pope to appoint an investigative committee.
That committee has now uncovered large cash deposits and withdrawals by the missions of Iran, Iraq and Indonesia, people with knowledge of the situation have told Reuters.
The Vatican’s financial watchdog, which examined the transactions in 2011, believed the embassies’ justifications for the transactions were too vague or disproportionate to the amounts—up to 500,000 euros at a time.
Now the bank and the watchdog want to reduce the possibility that the Institute for Religious Works (IOR), as the bank is formally called, could be an unwitting vehicle for illicit transactions.
Four people with knowledge of the matter said the closure of the accounts was likely to be a key recommendation of the review, which is set to be completed by the end of the year.
The IOR is a private bank—currently with about 7.1 billion euros in assets—whose stated goal is to hold and manage funds for religious orders of priests and nuns, Catholic charities, Vatican employees, and other Catholic institutions. But the number of account holders has swelled to 19,000 over the years and diversified far beyond the original Catholic depositors.
Fewer than two dozen of the 180 countries accredited to the Vatican have accounts at the IOR; many Western states such as the United States and Britain do not.
Reuters said it has learned that the Financial Information Authority (AIF), the Holy See’s financial watchdog, wrote to the IOR in the second half of 2011 expressing its concern over several cash withdrawals and deposits by the embassies of Iran, Iraq and Indonesia, according to the people with knowledge of the situation.
Iran, Iraq and Indonesia are classified by international institutions and governance bodies as countries at high risk of financial crimes. The Holy See’s regulators also thought the justifications for the withdrawals, including one that simply said “personnel,” were vague, these people said. It was not clear where the money for the cash deposits came from.