Financial-Transparency Law Enacted
BY Edward Pentin
Nov. 3-16, 2013 Issue | Posted 10/31/13 at 3:58 PM
A new law governing financial transparency, supervision and information-sharing within the Vatican came into effect in October, the Vatican announced.
The Holy See Press Office said in a communiqué Oct. 9 that the new norm, Law XVIII, "strengthens the current internal system for the prevention and countering of money laundering and the financing of terrorism, in conformity with international guidelines."
It marks the latest development in efforts by both Pope Francis and, up until his retirement, Benedict XVI to reform the financial system of Vatican City and the Holy See.
Law XVIII implements Pope Francis’ "motu proprio" of Aug. 8, which called for a broadening of existing Vatican laws on financial supervision.
The Vatican said the new law is also in continuity with existing norms introduced by Pope Benedict XVI in 2010 aimed at preventing and countering illegal activities in the area of monetary and financial dealings.
The new regulation is also enacted in conjunction with Pope Francis’ "motu proprio" of July 11, which reformed some of the Vatican’s penal laws related to crimes of a financial nature. Law XVIII, the Vatican added, is "a contribution to the stability and integrity" of the Vatican’s financial management "at a global level."
Vatican spokesman Father Federico Lombardi stressed that Law XVIII formally expands the competence of the Vatican’s Financial Intelligence Authority (FIA), strengthening its preventive and prudential vigilance and the overall trustworthiness of all Vatican financial operations.
But he said Vatican authorities still are working on establishing rules for the supervision of the financial dealings of foundations and nonprofit organizations based within Vatican city state — a measure also included in the Aug. 8 "motu proprio."
In a separate statement, Archbishop Dominique Mamberti, secretary for relations with states, said that "special attention" will now be dedicated to giving information on "suspicious activities," which will be carried out under the auspices of the Financial Information Authority.
If a "valid reason" to suspect activities of money laundering or financing of terrorism should occur, the Financial Information Authority will send a "detailed report" to the Vatican’s promoter of justice, and transactions and operations under suspicion may be suspended "for up to five working days," the archbishop explained.
He added that the FIA has powers of "general supervision" to ensure prescribed measures are taken by "obligated subjects" against money laundering and the financing of terrorism. He also said that "administrative sanctions" can be applied by the FIA, or, in the most serious cases, by the president of Vatican city state, upon suggestion by the FIA.
Archbishop Mamberti stressed that Law XVIII provides for "prudential supervision" of bodies that handle financial activity "in the name of or on behalf of third parties, for the purposes of the production or exchange of goods or services." This has been done to meet recommendations of MoneyVal, the Council of Europe’s financial watchdog that carried out a review of the Vatican’s finances last year, the archbishop said.
The Vatican diplomat further stated that individuals who threaten peace and international security will be automatically denied the ability to trade or make financial transactions with the Vatican. He said the FIA may immediately place "a preventative block" on their goods and resources and financial transactions. "Cautionary measures" can also be applied to those where there are "valid reasons to suspect" they pose a threat to peace and international security, but only if the subject is added to the list of suspects within a 15-day period.
The new law also regulates the "cross-border transportation" of cash amounting to more than 10,000 euros, in cooperation with other states and "on the basis of agreement protocols," Archbishop Mamberti said.
Msgr. Scarano’s Trial
The news comes as the trial continues of Msgr. Nunzio Scarano, the former Vatican accountant accused of smuggling $26 million in cash into Italy at the behest of a family of shipping magnates. The Italian official worked at the Administration of the Patrimony of the Holy See (APSA), the department that manages the Vatican’s physical properties and investments.
All the assets of APSA belong directly to the Pope, whereas the assets of the Institute for the Works of Religion (the Vatican Bank) belong to dioceses and religious orders.
Rome prosecutors said Oct. 8 that existing controls put in place by the Vatican "don’t go far enough" and still lack the supervisory and monitoring powers required to prevent money laundering and other financial crimes. They said the destination and provenance of funds, especially those from third parties, were difficult to track.
It’s not clear, however, whether their assessment included the latest regulatory measures. Also, in July, Pope Francis established a commission to review the Vatican’s economic and administrative structures, including APSA, but their recommendations are not expected for some time.
As far as Archbishop Mamberti is concerned, the three-year program of reforming Vatican finances has now reached a "particularly advanced stage."
The fundamental purpose of these changes, he said, has been "to contribute in a concrete way to the growth of the international community, within which the Holy See is called to play a guiding role and example."
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