"You have to understand, a lot of good can be done in those grey areas," he told CNA. "Not everything the Church does or supports can be printed in a financial statement like a normal company. Sometimes the Church must be able to help without being seen to be helping."
Among other charges, BSI was found guilty of allowing sovereign wealth funds to use the bank for "pass through transactions," in which funds are transferred into a bank and passed through multiple accounts in a single day before being transferred back out again. Such activity is considered by regulators to be a clear warning sign of money-laundering. BSI was found to have systematically failed to document or investigate such transactions.
The FINMA report also highlighted instances in which BSI employees complained about the lack of transparency in handling transactions by sovereign wealth fund clients. Forbes magazine quoted one employee's internal complaint, saying "My team is implementing these transactions without really knowing what we are doing and why and I am uncomfortable with this. […] there should be a stronger governance process around all this." No action was taken in response to this and similar complaints.
The connection to BSI comes to light as the Vatican's own financial watchdog is struggling to assert its credibility. On Nov. 18, the president of the Financial Information Authority (AIF), René Brüelhart, resigned his post.
Although the Vatican press office characterized the departure as the end of "a five year term," Brüelhart had not appointed for a fixed period, and he made it clear he had resigned.
Shortly thereafter, Marc Odendall, a member of the AIF board, resigned as well, saying that the Egmont Group, through which 164 financial intelligence authorities share information and coordinate their work, had suspended the AIF.
Odendall told the Associated Press that the AIF had been effectively rendered "an empty shell" and that there was "no point" in remaining involved in its work.
The agency's director, Tommaso Di Ruzza, was recently given a clean bill of health after a suspension which followed a raid on his office by Vatican gendarmes. That raid also targeted offices at the Secretariat of State and is believed to be part of an internal investigation into the London property deal funded by the BSI loans.
In addition to Di Ruzza, several officials at the Secretariat of State were also suspended and barred from entering the Vatican following the raids. Among them were Msgr. Mauro Carlino and Dr. Caterina Sansone, both of who have served as directors of a London holding company used by the Secretariat of State to control the London property.
Ed Condon is a canon lawyer and worked as Catholic News Agency's Washington DC editor until December 2020.