A Vatican Observer Vatican's revamped financial watchdog: where it's come from and what's in store

Apr 16, 2020

The appointment of  a new director of the Vatican Financial Intelligence Authority (AIF) moves the Vatican path toward financial transparency toward a fourth season.

Giuseppe Schlitzer, the new director of the Vatican financial monitoring outfit. Schlitzer replaces Tommaso Di  Ruzza, who served as director from 2015 to 2020 and worled in the AIF ranks since 2011, coming from the Pontifical Council for Justice and Peace.

Di Ruzza's mandate expired on Jan. 20 and was not renewed. Di Ruzza was suspended from service  in November of last year, following an investigation into the purchase of  luxury real estate in London by the Secretariat of State.

Along with Giuseppe Schlitzer, the AIF got a deputy director, Federico Antellini Russo. If the appointment of Schlitzer from outside the Vatican ranks might give the impression the Vatican authorities have felt the need for change and fresh blood, the appointment of Antellini Russo says that the Holy See wants to preserve the work done until now. Antellini Russo has been working with the AIF since 2015. He is an insider, he knows how the job has been done, and he will be able to support the new director in keeping with  Di Ruzza.

On his side, Tommaso Di Ruzza said hethanks the Holy Father, "who allowed me to serve the Holy See. During these years, the AIF worked at its best to build a sound and internationally credible anti-money laundering system. It  was my commitment and service on both technical and moral level."

The new director, Schlitzer, studied Economics at the Federico II University in Naples and had advanced training in the United States at the University of Chicago and George Washington University. He worked for the Bank of Italy, the International Monetary Fund, and the Italian Industrial Union. He is the vice president of the International Jacques Maritain Institute.

Federico Antellini Russo graduated with a degree in Political Economics from the prestigious LUISS university in Rome. From 2008 to 2013, he worked in research and  development area at the Consip, a joint-stock company held by the Italian Ministry of Economy and Finance. From 2013 to 2015, he worked in the research and studies service of the Cassa Depositi e Prestiti – an Italian investment fund – 83 percent of which  is owned by the Italian Ministry for Economy and Finances.

With Schlitzer and Antellini Russo's appointments, then, the top ranks of the Financial Intelligence Authority are complete. Pope Francis had already appointed Carmelo Barbagallo as the AIF president after he decided not to renew the mandate of René Bruelhart, who served as president from 2014 to 2019.

There are still two vacant positions, though. Marc Odendal and Juan Zarate, two members of the board of directors, resigned after Bruelhart's exit. At the same time, the Holy See was suspended from the Egmont Group's secure network because of the investigation. The AIF then was re-admitted to Egmont's  secure network after the Vatican Tribunal and the AIF clarified their positions in a memorandum of understanding.

The new AIF director inherits the remarkable work done by Di Ruzza. The Vatican Secretariat and many international counterparts credited Di Ruzza for a great job, that can be fully documented. Pope Francis himself, in his Christmas address to the Roman Curia in 2018, praised the efforts of the Vatican Financial Intelligence Authority.

Di Ruzza joined the Financial Intelligence Authority in 2011, coming from the Pontifical Council for Justice and Peace. Under his direction, the Holy See position in international relations was strengthened.

Among the biggest successes of Di Ruzza's term are the  admittance of the AIF into the Egmont Group, which gathers 150 financial intelligence units from all over the world; the Holy See's admittance in the Single Euro Payments Area (SEPA), which allowed the Holy See to have a Vatican  IBAN for the first time; and, the strengthening of international cooperation in terms of countering money laundering, with more than 60 memoranda of understanding signed with counterparts from all over the world.

Di Ruzza was among the drafters of the new Vatican anti-money-laundering law issued in January 2012. Thanks to that law, the Holy See got a generally positive evaluation of its anti-money-laundering system by the Council of Europe's committee, Moneyval.

The adoption of the new law marked the beginning of the "second phase" in the building of the Vatican system for financial transparency. During the first stage, the anti-money-laundering law was drafted in a hurry, following the Italian model and under the pressure of the seizure of funds from the Institute for Religious Works (commonly but inaccurately styled the "Vatican Bank"). The money was later unfrozen, once the law was improved.

The second phase was rather characterized by the adoption of a sustainable, long term approach. After the first reform of the Vatican's anti-money-laundering framework, there was a second reform in July 2013. The law had been substantially re-written, further improving the Holy See's anti-money-laundering system.

The third phase began after the new anti-money-laundering law was in place. In November 2013, the AIF got  new statutes, which Di Ruzza contributed to sketch down.

The Council of Europe's Moneyval has recognized the Holy See progress. The Holy See adhered to the Moneyval program in 2011. Since then, the committee has issued four reports on the Holy See.

The first report, published in 2012, was about the overall anti-money laundering system. Then, there were three progress reports in 2013, 2015 and 2017. All of them highlighted the Holy See's steps forward in setting up a sound anti-money-laundering system that met international standards.

The next progress report will be about the effectiveness of the anti-money laundering system. Moneyval will look into the Vatican judicial activity of the last five years, to assess if the Vatican prosecutor has followed Moneyval recommendations and how.

The Holy See was supposed to undergo a Moneyval evaluation again in 2020. The COVID-19 outbreak postponed the evaluation, and the Holy See will now have more time to prepare the papers.

All this to say that we are, in effect, entered upon a  fourth phase of reform.

Time will tell if the new AIF director will carry forward the work done according to an international mentality, or if he will go back to a bilateral mindset based on a privileged relationship with Italy.

|