The third annual report of the Financial Intelligence Authority shows that the Vatican's anti-money laundering legal system has been consolidated, journalists were told on Friday.

The May 29 report regards the 2014 annual report, and the AIF noted that the year "saw a continous strengthening of the legal and institutional framework of the Holy See and Vatican City State to regulate supervised entities."

René Bruelhart, president of the authority, highlighted that "with the introduction of Regulation No.1, we have completed the prudential supervisory framework of the Holy See and Vatican City State."

The AIF also concluded its first ordinary on-site inspection of the Institute for Religious Works, informally known as the 'Vatican bank,' and – though the inspection did not find any fundamental shortcomings – the authority provided an action plan for the full and systematic adjustment of existing procedures to the required standards in accordance with Law No. XVIII.

Coming into effect of October 2013, Law XVIII is a comprehensive text that outlines the design and functions of the Vatican financial system. The law was the last step in the path of implementation of the first Vatican anti-money laundering law, which was amended and then substantially rewritten with Law XVIII.

According to Tommaso Di Ruzza, director of the AIF, "the first on site inspection of the IOR is an important consequence and a concrete sign of the effectiveness of the AML/CFT (anti-money laundering / counter financing of terrorism) system adopted by the Holy See and by Vatican City State."

The new framework marks the third phase of Vatican financial reform. Initially, there was an assumption of responsibility made under Benedict XVI, who issued the first Vatican anti-money laundering law. Then there was a season of adjustments and improvements, the law was amended and the Vatican strengthened its international cooperation. This is the season when the system settles down, and starts working in effect.

As a result, the Vatican now complies with international standards because of the effectiveness of its domestic system.

The reporting system data is a proof of the consolidation of the vigilance system. In 2012, the AIF had received six suspicious transactions reports; in 2013, it received 202; and in 2014, 147.

"Such development is a consequence both of the full implementation of the legal framework and of the substantial improvement in the operational performance of the supervised entitites with the regard to the prevention of the financial crime," the AIF release reads.

It is necessary to clarify that a transactions report does not necessarily mean a crime, and that the AIF does not charge anyone over crimes. "As we receive a suspected transactions report, we analyze it, and, if we find something that may be considered a crime, we forward it to the Vatican prosecutor," Di Ruzza explained.

From that point on, the issue is handled by prosecutors, and not the AIF, he emphasized.

In 2014, seven reports were passed on to the Vatican promoter of justice for further investigation by judicial authorities.

The AIF also strengthened bilateral cooperation between itself and its foreign counterparts, which passed from four in 2012 to 81 in 2013, to 113 in 2014.

International cooperation was also strengthened through the signing of memoranda of understanding with the Financial Intelligence Units of country such as Australia, France, and the UK, and also with regulators of Germany, Luxembourg, and the United States.

In additional Vatican financial news, Pope Francis signed on May 28 a motu proprio, Il Fondo Pensioni, revising the statute of the Vatican Pension Fund.

The motu proprio changed the statues of the pension fund, but does not affect the regulations governing the pensions themselves. The president of the Fund's board of directors will now be directly appointed by the Pope, on the advisement of the Council for the Economy; previously, the president of the Administration of the Patrimony of the Apostolic See assumed the post automatically.

The revisions follow from the establishment of the Council and the Secretariat for the Economy.