Pope Francis approves overhaul of Vatican’s financial watchdog

Vatican City, Dec 5, 2020 / 07:35 am

Pope Francis approved Saturday sweeping changes to the Vatican's financial watchdog authority.

The Holy See press office announced Dec. 5 that the pope had ratified new statutes for the Financial Intelligence Authority, renaming the agency created by Benedict XVI in 2010 to oversee Vatican financial transactions.

The body, which ensures that the Vatican complies with international financial standards, will no longer be known as the Financial Information Authority (Autorità di Informazione Finanziaria, or AIF). 

It will now be called the Supervisory and Financial Information Authority (Autorità di Supervisione e Informazione Finanziaria, or ASIF).

The new statutes also redefine the roles of the agency's president and directorate, as well as establishing a new Regulation and Legal Affairs Unit within the organization.

Carmelo Barbagallo, the authority's president, told Vatican News that the addition of the word "Supervisory" enabled the agency's name "to be aligned with the tasks actually assigned to it."

He noted that, in addition to carrying out its original functions of gathering financial intelligence and combating money laundering and the financing of terrorism, the agency had also supervised the Institute for the Works of Religion, or "Vatican bank," since 2013. 

He said that the new unit would handle all legal issues, including regulation. 

"The tasks of defining the rules have been separated from those of exercising controls," he said. 

He explained that the agency would now have three units: a Supervision Unit, a Regulation and Legal Affairs Unit, and a Financial Intelligence Unit. 

Barbagallo, whose role as president is significantly strengthened by the changes, said that one of the most important novelties was that in future the agency would be required to follow stricter rules on the appointment of new lay personnel. 

The watchdog will have to consult a body known as the Independent Evaluation Commission for the Recruitment of Lay Personnel to the Apostolic See, known by its Italian acronym, CIVA.

Barbagallo said this would ensure "a more extensive selection of candidates and a greater control in hiring decisions, avoiding the risk of arbitrariness." 

The approval of the new statutes marks the end of a year of upheaval for the agency. At the start of 2020, the authority was still suspended from the Egmont Group, through which 164 financial intelligence authorities worldwide share information.

The agency was suspended from the group on Nov. 13, 2019, after Vatican gendarmes raided the offices of the Secretariat of State and the AIF. This was followed by the abrupt resignation of René Brülhart, the authority's high-profile president, and the appointment of Barbagallo as his replacement. 

Two prominent figures, Marc Odendall and Juan Zarate, then resigned from the AIF's board of directors. Odendall said at the time that the AIF had been effectively rendered "an empty shell" and that there was "no point" in remaining involved in its work.   

The Egmont Group reinstated the AIF on Jan. 22 this year. In April, Giuseppe Schlitzer was appointed director of the agency, succeeding Tommaso Di Ruzza, who was one of five Vatican employees suspended after the raid. 

During an inflight press conference in November 2019, Pope Francis criticized the AIF under Di Ruzza, saying that "it was AIF that did not control, it seems, the crimes of others. And therefore [it failed] in its duty of controls. I hope that they prove it is not so. Because there is, still, the presumption of innocence."

The watchdog authority issued its annual report in July. It disclosed that it had received 64 suspicious activity reports in 2019, 15 of which it forwarded to the Promoter of Justice for possible prosecution. 

In its annual report, it hailed "the rising trend in the ratio between reports to the Promoter of Justice" and cases of suspicious financial activity.

The report came ahead of a scheduled inspection by Moneyval, the Council of Europe's anti-money laundering watchdog, which has put pressure on the Vatican to prosecute breaches of financial regulations. 

Speaking after the release of the AIF's annual report, Barbagallo said: "Several years have gone by since Moneyval's first inspection of the Holy See and Vatican City State, which took place in 2012. During this time span, Moneyval has remotely monitored the many advances made by the jurisdiction in the fight to prevent money laundering and the financing of terrorism."

"As such, the upcoming inspection is especially important. Its outcome may determine how the jurisdiction is perceived by the financial community."

A report based on the inspection is scheduled for discussion and adoption at a plenary meeting of Moneyval in Strasbourg, France, on April 26-30, 2021.

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