Vatican enacts laws on financial transparency

(December 31, 2010) The Vatican enacted laws on Thursday to bring its bank in line with international standards on financial transparency and the fight against funding terrorism. It was the biggest action ever taken by the Vatican to meet demands for more financial openness. It establishes an internal watchdog, known as a Financial Information Authority (FIA), to check compliance with international financial law. Pope Benedict XVI launched the initiative with a "Motu Proprio", a form of executive order, in which the Vatican establishes a set of internal laws promising its bank and all other departments will adhere to regulations and cooperate with foreign authorities. "The Vatican now is totally inserted into this system in solidarity with the international community and with international authorities," Vatican spokesman Father Federico Lombardi said. The new laws aim to make the Vatican City, a 108-acre sovereign state surrounded by Rome, comply with the rules of the Financial Action Task Force (FATF), a Paris-based body that lists states failing to comply with standards on money laundering and terrorism financing. By adopting the new laws, including establishing the FIA along the lines of those in other countries, the Vatican commits itself to complying with FATF standards and coordinate with the group and law enforcement agencies. The new laws that will take effect by April 1, will affect all Vatican departments. This means offices such as its missionary department - the Congregation for the Evangelization of Peoples, which handles tens of millions of dollars a year, will be subject to stringent regulations and oversight. Vatican employees suspected of violating the norms will be investigated by its Financial Information Authority and judged by Vatican tribunals, but would serve any prison time in Italian jails, in accordance with standing agreements between Italy and the Vatican. Money laundering would be punishable by up to 12 years in prison. Fr. Lombardi said the laws would make Vatican institutions less vulnerable to misuse and make the Catholic Church "more credible before the members of the international community".