VATICAN CITY –– The Vatican’s financial watchdog agency conducted its first routine on-site inspection of the Vatican bank to verify its compliance with regulations to prevent money laundering and the financing of terrorism.
While the inspection, conducted in early 2014, showed “no fundamental shortcomings,” the oversight agency gave the bank “an action plan” to help it fall in line more fully with required international standards, said Rene Brulhart, president of the Financial Intelligence Authority.
The action plan represented “a strategy” for ways the bank can improve its procedures in preventing and countering financial transgressions and crime, Brulhart told reporters at a Vatican news conference May 29.
Bruhlhart and Tommaso Di Ruzza, director of the intelligence authority, presented the agency’s third annual report since the agency was established by Pope Benedict XVI in 2010 to monitor Vatican financial operations and ensure they meet international norms against money laundering and the financing of terrorism.
The new report covers the “facts and figures of what happened in 2014,” Brulhart said, including the implementation, strengthening and expansion of recent regulations and international agreements.
Part of the new transparency measures has meant any suspicious or dubious financial activity must be reported to the Financial Intelligence Authority.
While only six suspicious transactions were reported in 2012 after the requirement went into effect, 202 reports were filed in 2013 and 147 more in 2014.
The high number of reports shows “we have a reporting system that works” and people are monitoring and flagging potential risks or infractions, Brulhart said.
The reporting system does not require evidence of wrongdoing or a court order; “a suspicion is sufficient,” he said.
The independent agency analyzes the reports it receives and forwards cases to the office of the promoter of justice at the Vatican City State’s tribunal if it finds reasonable grounds to suspect money laundering or the financing of terrorism.
Bruhlhart said seven reports were forwarded to the promoter of justice last year in cases that mostly dealt with potential fraud, tax fraud or tax evasion.
As a “preventative measure,” the Financial Intelligence Authority suspended three financial transactions and operations in 2014 in connection with reports of suspicious activities.
While Bruhlhart said he would not give any details about those cases, the annual report said the amount of money involved totaled more than 561,000 euros (US$617,100).
The agency continued to sign agreements with other foreign financial intelligence authorities to exchange information and cooperate in the global fight against money laundering and financing terrorism. With agreements in place with 20 countries, including Australia, the United Kingdom and the United States, he said the agency had 113 exchanges of information — the majority of which were foreign authorities requesting information from the Vatican watchdog.
The number of requests for information may continue to rise in coming years, he said, as they sign more memoranda of understanding with more nations.
When asked to measure what milestone the Vatican was at if one could imagine the road to complete reform were a 10-kilometer-long path, Bruhlhart said, “it depends on how fast you run” and if one is headed in the right direction; otherwise, “you never arrive.”
He said the regulations, oversight and prevention were all part of a continual process that required “different steps to be taken.”
“The biggest step was implementation” of the various frameworks, laws and procedures, he said.
“Now is everything great and perfect? No. It most probably will never be because it is really a kind of ongoing process. But it is very good and it’s a very transparent process,” he said.
When it comes to heading in the right direction, he said, “we are very, very much on track. Now if we are on kilometer five or six or seven or eight, we’ll keep walking and keep on walking.”