Moneyval expressed doubt about the Vatican tribunal’s ability to resolve multiple complex financial cases at the same time and in a timely manner.
The report noted that financial criminal investigations have only led to two convictions for self-laundering -- one in 2018 and another in 2019. (There was a third conviction in January 2021, after the conclusion of the inspection.)
At the same time, the report suggested that the sanctions in these two convictions were “not proportionate and dissuasive.”
The watchdog recommended that the Vatican work to strengthen the expertise of financial investigators as well as introducing new procedures to help prosecutors stay on track during the process of investigating, prosecuting, and indicting financial crimes.
Moneyval also recommended establishing “a comprehensive procedure for petitioning the Holy Father when requesting consent to pursue a criminal prosecution against cardinals and bishops” to streamline the step, which is required by Church law.
In April, Pope Francis amended part of a law issued last year regulating Vatican City’s judicial system, now allowing the court of first instance to rule on criminal trials of bishops and cardinals.
The report also cautioned that Vatican authorities might not be properly assessing the level of risk of fraud from mid-level and senior figures, or “insiders,” in the Vatican.
The report said that Moneyval disagreed with Vatican authorities’ assessment of a low risk for abuse of office for personal benefit and related money laundering by Vatican insiders, terming the risks “important.”
It added that cases that received wide coverage in the media had “raised a red flag for potential abuse” of the Holy See and Vatican City State’s systems by personnel.
Moneyval said that though these cases had led to positive actions since 2014, they were not addressed with the General Risk Assessment, “which raises some concerns as to the degree to which these matters are formally recognized and acknowledged by all authorities.”
An October 2019 raid by Vatican gendarmes on the offices of the Vatican’s financial intelligence unit, conducted in connection with the London property scandal, was also flagged in the report for having potentially compromised confidential information.
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The report noted that during the search, a number of devices and documents were seized which contained information the office had received from five European financial intelligence units.
The Vatican prosecutor’s office notified the European entities three days later about the raid and said that the information seized would be used for judicial and prosecutorial purposes.
The Egmont Group, through which 164 financial intelligence authorities share information and coordinate their work, suspended the Vatican just over a month later, but reinstated it in January 2020.
In its report, Moneyval said that from its discussions with Vatican authorities, “it is unclear” whether judicial authorities had carried out “any risk assessment” in relation to the potential international consequences for the Vatican’s financial intelligence unit arising from such a search and seizure.
The report gave a positive evaluation of recent changes to the Holy See and Vatican City State’s financial laws and to the strengthening of the Supervisory and Financial Information Authority (ASIF).
In an interview with Vatican News June 9, ASIF president Carmelo Barbagallo said that the Moneyval evaluation “went well.”