The searches and seizures conducted by Vatican police at the Secretariat of State and the Financial Intelligence Authority inaugurated an institutional crisis within the Vatican. Among its other effects, this crisis could have consequences on the next round of evaluations by the international money laundering oversight body, Moneyval.
Moneyval is the body of the Council of Europe that reviews the anti-money laundering measures of the States that join the program, to which the Holy See adhered in 2011.Ever since, Moneyval has issued periodic reports on the Holy See. The reports showed that the Holy See improved its anti-money laundering system continuously. The first report was issued in 2012 and was about the general findings on the Vatican anti-money laundering system. There have been three subsequent progress reports: in 2013, 2015 and 2017. The final release of the 2017 Moneyval progress report stressed that “the Holy See should present an update on action taken to implement the Committee´s recommendations by December 2019.”
According to the regular procedure applied to States that do not undergo a reinforced examination, the next Moneyval review of the Holy See should be scheduled in 2020. The 2017 report stressed that “the Holy See will be fully evaluated against the 2012 FATF Anti-Money Laundering and Counter-Terrorism Financing Recommendations and their effective implementation within MONEYVAL’s ongoing 5th round of mutual evaluations”. It seems things go well. Let us take a more in-depth glance at the situation.
The 2020 Moneyval review, unlike the 2012 review, will focus on the effectiveness of the anti-money laundering law. The 2017 report noted that “the overall effectiveness of the Holy See’s engagement with combatting money laundering depends on the results that are achieved by the prosecution and the courts.” This is a crucial point. The 2017 progress report also stressed that “the results on the law enforcement/prosecutorial/judicial side two years after the last review remain modest” (2017 Moneyval progress report on the Holy See / Vatican City State, p. 64).
The questions are whether the office of the Vatican prosecutor has adopted the Moneyval recommendations, and if so, how. In 2016, the Vatican tribunal established a special section against economic and financial crimes. Up to 2018, the Financial Intelligence Authority disseminated in six years 27 reports for alleged money laundering to the Vatican prosecutor. Nine of the cases were dismissed, six other were under motion of dismissal. At the inauguration of the Vatican judicial year on Feb. 16, 2019, the Vatican prosecutor, Gian Piero Milano, said that the Financial Intelligence Authority issued six reports, while two of the previous reports were dismissed.
The figures say that the Vatican prosecutor did not proceed on financial crimes before 2016, though the Vatican anti-money laundering law was issued in 2011. The current institutional crisis does not help the Holy See. The Holy See is a particular State, and this is recognized. However, the Holy See undertook some international obligation, and it must fit standards. The figures for five years cannot be healed in one.
The Holy See counterpart and international organization showed preoccupation about the current situation that led to the suspension of five Vatican officials.
The suspension of Financial Information Authority (AIF) director Tommaso Di Ruzza was particularly striking for the counterpart. The AIF and its director enjoyed good credibility in the Vatican and the international field. The AIF established strong, trusted relations with its many of its European counterparts. There are also excellent bilateral relations with Italy: the AIF signed a memorandum of understanding with the Bank of Italy in 2016, following the memorandum of understanding signed with the Italian Unit for Financial Unformation (UIF) in 2013. The AIF also garnered international credit for its contribution to combating financial crimes. The arrest of José Gomes Graciosa, counselor of the Brazilian Federal Court of Audit, took place thanks to the AIF’s decisive contribution.
The Italian magazine, L’Espresso, published last week leaked papers in its latest issue that said the AIF had “an unclear role” in the purchase of a London luxury building by the Secretariat of State. According to the papers, there are no specific allegations against the AIF’s director, and the AIF is mentioned because of its institutional activities. The same Italian magazine – certainly not a pro-Catholic one – stressed that there would be “other pieces of evidence the Vatican magistrates do not mention.”
The pieces of evidence, L’Espresso wrote, “show that the AIF, as soon as they received a report from Pena Parra, immediately forwarded their own report to the British and Luxembourgeois anti-money laundering authority.”
The scenario is food for questions. Before searching in the AIF’s offices, did the prosecutor check actual powers and duties of the authority in its financial intelligence competences? If there was a report by the Secretariat of State, were there ongoing intelligence activities? Did the prosecutor assess the international consequences of its decision?
The secrecy of information and the protection of documents are among the pillars of financial intelligence activities. If the raid in the AIF’s offices led to the seizure of communication by foreign UIFs, there would be a reaction by interested UIFs and, above all, by the Egmont Group, an umbrella organisation that brings together UIF outfits from around the world. The Holy See’s Financial Information Authority joined the group in 2013. There is, then, more food for thought.
According to L’Espresso, there was a report by the Secretariat of State to the AIF. The AIF did its job, contacted the interested counterpart, and asked to trace all the financial flows. It can be easily assessed that, once the financial flows were traced, the AIF could ascertain the actual movement and, without giving scandal, the eventual network of exploiters and even tricksters, working from outside and inside the Vatican. The AIF was stopped one step before the closing of the intelligence procedures. Was this decision adequately assessed? These questions and many others are left suspended. The response to these questions will weigh in the Holy See’s international relations.
* Catholic News Agency columns are opinion and do not necessarily express the perspective of the agency.