This article comes from the Chiesa website.
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Vatican and Finance. The April Revolution
Full power of control for Cardinal Nicora and his sidekicks De Pasquale and Condemi. The IOR will become a bank like many others, with the same rules and restrictions, in a competitive scenario. Will it succeed in keeping its traditional clientele?
by Sandro Magister
ROME, March 21, 2011 – Starting at the beginning of April, the Holy See will return to using a sanction that had practically fallen into disuse in the practice of canon law: prison.
This penalty is provided for by law no. 127 of the state of Vatican City, promulgated last December 30, which will go into effect next April 1. A law aimed against money laundering and the financing of terrorism.
But beyond this, the new norm will bring much more substantial novelties in the practices of the Vatican institutes that operate in the financial field, beginning with the one that most resembles a bank, the Institute for Works of Religion (IOR).
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Until now, the IOR has enjoyed broad autonomy of action. It worked outside of the international norms that regulate, standardize, and supervise the activities of the banks in various countries.
For the depositors of the IOR, mainly dioceses and religious institutes, this autonomy was seen as an advantage. The procedures for depositing and managing money were simple and confidential, like in a family. Secrecy was guaranteed. Interest rates were higher than in other financial institutions.
This absence of external supervision enjoyed by the IOR was, however, also very attractive to less virtuous subjects, tempted to use the Vatican bank for illicit operations, using religion as a cover, disguising themselves as benefactors or exploiting the naivety of depositors.
One suspected case of wrongful use of the IOR is, for example, the one that has been under investigation by the Roman authorities since last summer. At issue are operations totaling 23 million euro, in an IOR account deposited with an Italian bank, Credito Artigiano. First Credito Artigiano itself, then the Bank of Italy which it informed, and finally the public prosecutor's office in Rome suspected that the operation was intended to launder money from illicit sources. The 23 million euro were confiscated, and the president and director general of the IOR were put under judicial investigation.
The paradox of the affair is that Ettore Gotti Tedeschi, the banker who has been head of the IOR since September 23, 2009, was called to this role by Cardinal Tarcisio Bertone, the Vatican secretary of state, precisely in order to complete the work of cleaning up and modernizing the IOR undertaken by his predecessor, Angelo Caloia, removing the last stains, real or suspected.
Evidently, the operational machinery of the IOR does not yet meet these criteria. It still continues to function, in part, according to the old logic detached from any supervision.
But this is precisely what is about to end.
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The first act of this change goes back to December 17, 2009. It is the convention with the European Union by which the state of Vatican City took the euro as its own currency. The act required the Vatican to adhere to European norms on financial instruments and the circulation of money.
The second act is from December 30, 2010, and is precisely the execution of the commitment made one year earlier. Benedict XVI, with an apostolic letter in the form of a "motu proprio," instituted a Financial Information Authority with full powers of supervision over all the institutes and offices of the Holy See, the Roman curia, and Vatican City, including the IOR. And he imposed four laws on these institutes and offices, promulgated on the same day and intended to prevent and combat money laundering and the financing of terrorism.
These laws are similar to the ones already in effect in the "White List," meaning the states most diligent in preventing and combating financial crimes. They will go into effect in the state of Vatican City next April 1.
In the meantime, the new Financial Information Authority which will have to oversee the application of these laws has become operational, with the appointment of a president, a director, and four board members.
So all of the instruments have been provided so that the state of Vatican City may also be admitted onto the "White List" and that as a result the IOR may conform its activities to international standards and controls.
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The president of the new Financial Information Authority is Cardinal Attilio Nicora, who also remains president of the Administration of the Patrimony of the Apostolic See, a person of proven competence in the legal and financial fields.
The four board members are Marcello Condemi, Giuseppe Dalla Torre, Claudio Bianchi, and Cesare Testa.
Of the four, the first is the key man. Condemi is a professor of banking law, has worked as an appeals attorney with the Bank of Italy, and was a member of the Italian delegation to the GAFI, the Financial Action Task Force against money laundering, which is the institution that will evaluate the Holy See's request for admission onto the "White List."
The director of the new Vatican organism is Francesco De Pasquale, appeals attorney, also a leading expert on financial irregularities.
Condemi and De Pasquale are the authors of the directory that the Bank of Italy published in 2008 on the matter, entitled "Lineamenti della disciplina internazionale di prevenzione e contrasto del riciclaggio e del finanziamento del terrorismo [Features of the international discipline on prevention and opposition of money laundering and the financing of terrorism]."
Their book was condensed in 2010 by another expert in the field, Manlio d'Agostino, in a manual of practical guidance for use by bank employees, published by the Italian Banking Association: "Antiriciclaggio. Vademecum per l'operatore [Anti-laundering Employee Handbook]."
Manlio d'Agostino is national vice-president of the Unione Cristiana Imprenditori Dirigenti and president of its youth section.
In reading his manual, one intuits that the application of international anti-laundering standards will involve a small revolution not only for the IOR, but for all Vatican administrative offices.
Every operation, in fact, even the smallest, must be subjected to very stringent controls and verifications. And the slightest suspicion of irregularity must be reported immediately to the Financial Information Authority headed by Cardinal Nicora.
This, in turn, is endowed with very broad powers, which no official secret can resist.
For the IOR, it will be the end of its autonomy. It will have in the organism headed by Nicora a permanent "tutor," which will watch over every one of its operations.
That is, what happens inside the Vatican walls will have to be the same as what happens in the countries of the "White List."
Italy is one of these. In the first six months of 2010 – the most recent available data – Italian banks sent the Guardia di Finanza 10,347 notifications of suspected money laundering operations. Another 2,622 notifications were sent from financial intermediaries, another 1,759 from post offices, and another 200 from professional offices and insurance companies.
Of this mass of notifications, the Guardia di Finanza has investigated 9,752. In 447 of these, it has identified illicit operations for 3.2 billion euro. 447 people have gone to jail.
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Against the background of this obligatory and increased supervision in Italian banks against suspected money laundering operations, one can perhaps reinterpret – and better understand – the departure of board member Giovanni De Censi from the supervisory board of the IOR.
De Censi is president of Credito Valtellinese, which in turn is the owner of Credito Artigiano. For the IOR, Credito Artigiano has traditionally been a friend. And yet, it was precisely a notification from Credito Artigiano that began the judicial investigation referred to above, which is now pending against the Vatican bank for suspected laundering.
The chronology of the matter is instructive.
On January 18 of 2010, the Bank of Italy asked Credito Valtellinese and its subsidiary Credito Artigiano – as it did other banks – to demand from the IOR detailed information on the ownership and movements of the accounts deposited with them.
On April 19, Credito Artigiano froze account number 49557 of the IOR, about which it evidently had suspicions that the IOR could not evade. At this date, the account held deposits of 28.3 million euro.
On September 6, with two faxes, the IOR nonetheless ordered Credito Artigiano to make two transfers with the money of that same account, for a total of 23 million.
On September 14, Credito Artigiano informed the Bank of Italy of the transfers ordered by the IOR and of the continuing absence of information about their ownership.
On September 15, the Office of Financial Information of the Bank of Italy notified Roman authorities of a possible violation of anti-laundering norms on the part of the IOR.
On September 20, the magistrature of Rome ordered the preventive confiscation of the entire sum deposited in the account of the IOR,and issued two notices of investigation against the president and director general of the Vatican bank, for omission of the procedures against money laundering.
It was gathered from this that the IOR operated, in this case, in a way different from how the Italian banks have operated since they have adhered to the stringent anti-laundering laws.
Between the traditional "friendship" with the IOR and respect for national and international rules, for Credito Artigiano the choice was obligatory.
Since last summer, De Censi – who has a Salesian brother, Ugo, a missionary in Peru – has not taken part anymore in the board meetings in supervision of the IOR. It was said that this was for health reasons, and it was true. But maybe not only for these.
Today, in fact, De Censi has resumed his activity in full, which includes being president of the Istituto Centrale delle Banche Popolari. In this garb, he has given two extensive interviews, on February 18 and 23, with "Avvenire" and "Corriere della Sera."
To the question about way he left the IOR, he replied:
"My mandate expired on December 31. I have been operated on, triple bypass, and someone, certainly with reason, believed it was opportune for me to rest."
The fact is that in the 2011 edition of the Annuario Pontificoio, released at the beginning of this month of March, De Censi is no longer listed on the supervisory board of the IOR. In his place is Antonio Maria Marocco, 77, from Turin, a notary by profession, administrative board member and president of the supervisory body of Unicredit, one of the biggest Italian banking groups.
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Last January 15, in the inauguration address of the judicial year, the promoter of justice of the tribunal of the state of Vatican City, Nicola Picardi, dedicated ample space to the new Financial Information Authority headed by Cardinal Nicora.
"It constitutes the hinge of the entire normative framework" against money laundering issued by the Holy See at the end of 2010, he said. "It is invested with very broad powers, including that of conducting verifications and checks on the cash entering or leaving the state." And it will work "in close collaboration with the Vatican judicial authority."
