— Rome — The European Commission’s financial monitor, MONEYVAL, has issued a highly critical report on the anti-money-laundering and general financial oversight efforts of the Holy See.
Both MONEYVAL and the Holy See describe the report as “positive” and cite “moderate” to “substantial” effectiveness ratings across a range of areas, but note significant room for improvement. “The Holy See welcomes the Moneyval Report,” a press release from the Vatican says, and promises also to renew “its commitment to continue working towards full compliance with the best international parameters.”
Issued in the wake of a scheduled review that took place earlier this year, the report’s basic findings are that the Vatican’s judicial arm is understaffed, underfunded, inexperienced, and gun-shy. The Vatican’s financial intelligence unit (FIU) — hamstrung until very recently — is meanwhile overstretched and under-supported.
“MONEYVAL notes that money laundering investigations during the period under review (until October 2020) were protracted,” the MONEYVAL press release announcing publication of the report says, “partly because of late responses from foreign counterparts to requests for assistance and partly because of under-resourcing on both prosecutorial and law enforcement sides, where there has been insufficient specialisation of financial investigators.”
“Consequently,” the summary continues, “results in court have been modest with only two convictions for self-laundering.” The press release also notes that recent developments highlighted in the report “are encouraging” in these regards.
Regarding the financial intelligence unit, the report itself says: “[T]he FIU and its most senior officials may be regarded as the Holy See / Vatican City State’s factotum on [anti-money-laundering / countering the financing of terrorism]. The central role exercised by the FIU, however, strains its already limited resources and at times detracts it from carrying out its core functions.”
Among the key findings with respect to the Vatican’s legal system and operations, the MONEYVAL report found that high staff turnover at the financial intelligence unit also is an issue.
“Staff turnover in the FIU has been particularly high,” the report noted. In fact, the experienced and highly regarded senior leadership of the Vatican’s financial intelligence unit – olim the Financial Information Authority, recently rebranded as the Supervisory and Financial Information Authority – departed in the wake of a major crisis that ensued after a police raid on several Vatican offices that has been the subject of severe criticism and intense scrutiny.
The precise reason for the raid never became clear, but it was somehow connected to the Vatican’s disastrous Sloane Avenue real estate venture and led — among other things — to the departure of senior AIF leadership and saw the Vatican’s financial authority temporarily suspended from the intelligence-sharing circle of the Egmont Group of worldwide FIUs.
Swiss lawyer René Brülhart saw his five-year mandate expire without renewal. When that happened, board member Marc Odendall resigned. “There is no point in staying on the board of an empty shell,” Odendall told the AP at the time. Tommaso Di Ruzza, Brülhart’s second-in-command, was suspended after the raid and eventually departed as well.
“The complete and rapid change of the entire intelligence team, including its top-most senior officials,” the report said, “has created a real risk that the FIU suffers from institutional memory loss.”
The report also noted that the Vatican’s inancial intelligence authority “did not have a comprehensive manual or a guidance document in place to guide analysts through operational analysis.”
Another major area of concern in the report was that senior officials — cardinals and bishops — have essentially been immune from prosecution and even investigation.
Pope Francis changed Vatican law in late April to allow for more regular prosecution of senior clerics, but the new paper arrangement has yet to be tested in practice.
The Holy See and Vatican City State will now be subject to MONEYVAL’s “regular follow-up” protocol, which occurs “when an assessed State or territory received partially compliant or non-compliant ratings in any of the six Core Recommendations or when the Plenary considers appropriate.”
The state or territory subject to regular follow-up is then expected to report within two years, and furnish evidence of actions taken or underway to address deficiencies and/or any other elements identified as in need of remedy.