.- New laws to prevent possible money laundering and terrorism financing from being channeled through the Vatican went into force on April 1.
The provisions are aimed at preventing money from being funneled through the Vatican using accounts that had historically provided anonymity in international banking.
The law was originally issued on Dec. 30, accompanied by a letter of approval from Pope Benedict XVI. According to an April 1 note from the Holy See's Press Office, the legislation resulting from the two documents constitutes "an event of great importance which has wide-reaching moral and pastoral implications."
In 2010, several large-sum transfers between bank accounts managed by the Vatican were frozen by European banks because of a lack of information on account holders and benificiaries. In response, the Holy See decided to ramp up its controls and bring its financial activities up to the most rigorous international standards.
According to Wall Street Journal, they had little choice as local Italian banks gave them an ultimatum: adjust to current standards or lose their business with them. Untraceable transactions were at the root of the problem.
The Journal reported that while in court to recover frozen assets of the Institute of Religious Works -popularly known as the "Vatican bank" - its president Ettore Gotti Tedeschi said, "The water was already up to our throats."
In the wording of the new law, all internal entities of the Holy See, including the Institute of Religious Works, are obliged to collaborate. The umbrella legislation also includes all organizations dependent on Holy See or associated with it.
A watchdog agency called the Financial Information Authority (FIA) has been put in charge of overseeing compliance with the new rules and keeping the financial activities of the Holy See up to date with international standards.
The authority is responsible for improving transparency, careful monitoring and more stringent record-keeping. Among the requirements are periodic reports due to Cardinal Attilio Nicora, its chairman.
The financial agencyâs representatives are being charged with improving the Vatican's status on the international scene by collaborating with the major European oversight groups, specifically in the areas of anti-money laundering and anti-terrorism financing. They hope to eventually be included on the "White List" of compliant institutions.
The Vatican said in the April 1 note that these efforts fit into its overall commitment to the Pope's most recent document on the social doctrine of the Church, called "Caritas in veritate."