Quora Answer: Can the Vatican Bank Still Get Away with Money Laundering?

The following is my answer to a Quora question: “Can the Vatican Bank still get away with money laundering?”

Yes.  The Vatican is a sovereign state; and its state bank, the Vatican Bank, formally known as the Institute for Religious Works (IOR), has the status akin to a central bank.  The Vatican has its own currency, the Vatican version of the Euros.  As of 2002, they signed an agreement with Italy allowing them to mint their own Euros, legal tender within the Eurozone.  When you can mint your own currency, and when you are as corrupt as the Vatican, you can perform magic accounting.

Moneyval is the common official name of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism.  They are the monitoring body of the Council of Europe.  47 member states report directly to its principal organ, the Committee of Ministers of the Council of Europe.  The task of Moneyval is assessing compliance with the principal international standards to counter money laundering, the financing of terrorism, and fraud.  It also monitors the effectiveness of their implementation, as well as making recommendations to national authorities in respect of necessary improvements to their systems.

This is important to know, because in 2015, Moneyval came down hard on IOR.  This is found in a Moneyval report that anybody has access to as long as they know where to look.  Moneyval correctly states that IOR had been abetting money laundering on an obscene scale for years.  For example, the IOR laundered the money stolen from Holocaust victims during the Second World War.  They laundered money the Catholic Church, and its entities stole from the rest of the world during the age of European colonialisation, and the Crusades.  This was nothing new.  What was new was that Moneyval actually attempted to take action, instead of closing an eye, as they had done since their founding in 1997.

In 2017, several thousand accounts have been closed or frozen, but Moneyval was not appeased.  This was a cosmetic act since these accounts had already been drawn down, and nobody was prosecuted.  It issued a 209-page progress report in December 2017, that noted not one single person was held to account for serious crimes.  This included tax evasion; criminal misappropriation of funds donated to the Vatican for its charities; the proceeds of organised crime, mostly from the Mafia; and money earned through drug trafficking, slavery, corruption and every conceivable nefarious deeds.  People fingered for having wealth in the millions that were not unaccounted for included Mary Teresa Bojaxhiu, “Mother” Theresa.

One week before the release of this damning report, IOR Deputy Director Giulio Mattietti was fired with no advance warning.  He was escorted from his office out of fear he might remove files from his desk.  His was the highest profile of several firings.  It was not officially confirmed by Moneyval, but these people were suspected of being whistleblowers, and the source of much of this damning information.  The IOR’s official reason was these were reforms, and part of a restructuring exercise.

After Pope Francis was elected, he tried to reform the IOR, and much of the bureaucracy, but he is one man against a corrupt edifice with many centres of power.  In that year, Paolo Cipriani, the former head of the bank, resigned under pressure from the Pope Francis, after a Vatican accountant, nicknamed “Monsignor 500”, was arrested for smuggling €26 million to Switzerland.  “Monsignor 500” gained his nickname for flaunting €500 notes.  So much for the vows of poverty.

Moneyval auditors found 69 actions involving 38 customers that were non-compliant with anti-money laundering laws.  No one was prosecuted to the full extent of the law by the Vatican Court.  The cases were eventually closed, the punishments were a sham, and the entire judicial process was a farce.  The report stated, “Eight money-laundering investigations have been closed formally without any charges, while six additional investigations have been concluded without an indictment for any offense and their formal closure has been requested.”

This report specifically highlighted the Vatican tribunal case where the chairman of the Vatican’s children’s hospital was accused of using around a half million euros, funds meant for sick children, to renovate a penthouse apartment for Cardinal Tarcisio Bertone, the former Vatican Secretary of State.  The cardinal was never under investigation despite this.  The hospital’s former president and treasurer were tried in a Vatican court for using the funds they funnelled through the IOR.  The chairman was given a suspended sentence.  The treasurer was acquitted.  It was a dog and pony show.  The funds were never recovered.  We should note that this is one case.  Hundreds of millions have gone missing.

When corruption is so entrenched that almost every person in a position of authority within the Vatican is siphoning billions, when the Vatican, as a sovereign state cannot be touched by international law, and when the people involved at the highest levels have diplomatic immunity, we would be naïve to believe that money laundering will stop.  People have disappeared investigating this.  To reiterate, the Vatican Bank is formally known as the Institute for Religious Works.  The question is whose religious works are they doing?