(Vatican Radio) “For the Holy See, this process is first and foremost a moral rather
than a technical commitment.” These were the words of Msgr. Ettore Balestrero, the
Undersecretary for Relations with States, commenting on the Moneyval Report on the
Holy See. Moneyval’s Report on the Holy See and Vatican City State was published this
morning. The Report comes in response to a request, made by the Holy See in February
2011, for its control systems and its safeguards against criminal activity in the
economic and financial sphere, to be evaluated according to the procedures of the
organization set up by the Council of Europe for this purpose.
Monsignor Balestrero
said that, even before the evaluation, the Holy See always had “a clear determination
to fight money laundering and terrorist financing, as well as a legal system that
already had several of the elements necessary to tackle ML/FT problems.” Noting that
the evaluators had found that the current system of the Holy See and of Vatican City
State is “largely compliant with international standards,” Msgr. Balestrero said:
“We are aware that, like other jurisdictions, some areas of the Vatican’s systems
to fight money laundering and the financing of terrorism still need to improve.” He
continued: “After adoption of the present law, the Holy See has continued to improve
its anti-money- laundering system. Above all, the Holy See and the Vatican Authorities
have moved from shorter-term solutions to the creation of long term, sustainable
and effective solutions; and will continue to do.”
In conclusion, Msgr. Balestrero
said “the report released today is not the end, but is rather an important passage
of our continuing efforts to marry moral commitments to technical excellence. We have
taken a definitive step to lay the foundations to a structure – a house if you will
– that is a robust and sustainable system to combat money laundering and the financing
of terrorism. Now it is our wish to fully construct a building that effectively shows
the Holy See’s and Vatican City State’s desire to be a reliable partner in the international
community.”
Below, you can read the full text of Monsignor Ettore Balestrero
remarks at the Press Briefing on the Occasion of the Publication of the First Mutual
Evaluation Report on the Holy See and on Vatican City State (“Moneyval Report”) Regarding
Adherence to the 40+ IX FATF Recommendations: PRESS BRIEFING BY MONSIGNOR
ETTORE BALESTRERO ON THE OCCASION OF THE PUBLICATION OF THE FIRST
MUTUAL EVALUATION REPORT ON THE HOLY SEE AND ON VATICAN CITY STATE (“MONEYVAL REPORT”) REGARDING
ADHERENCE TO THE 40 + IX FATF RECOMMENDATIONS As the Head of Delegation of
the Holy See to the Plenary Session of Moneyval that discussed and adopted the Holy
See’s First Mutual Evaluation Report on July 4, 2012, I welcome you to this briefing,
which aims to present the key findings of the Report and to share with you also some
insights as to where the Holy See has been and where it is going.
The
Goal: Making Moral Commitments Concrete
For the Holy See, this process
is first and foremost a moral rather than a technical commitment. As Pope Benedict
XVI stated in his 30 December, 2010 Motu Proprio, just as the rest of the international
community equips itself with the tools necessary to fight these evils, it is right
and good that the Holy See share in these efforts, adopting such tools “as its own”
and thereby also “carrying out the mission of the Holy See.” As the Secretariat
of State clarified in requesting this evaluation, the Holy See recognizes that moral
commitments must be accompanied by the technical compliance and effective implementation
of the international standards necessary to fight money laundering and the financing
of terrorism. Compliance and effective implementation are indeed what render moral
commitments concrete.
Our Jurisdiction – small in size, far reaching
in importance
Vatican City State has a very small territory, with a
small population, a very low level of domestic crime, and no market economy. It is
not a financial centre and its financial activities are meant to support its works
of charity and of religion. However the Holy See enjoys a recognized moral voice
and in this sense is deeply connected not only with its immediate neighbors, but with
all countries of the world. Moreover, the Holy See, as primarily responsible
for the universal mission of the Church, has a special ability – even duty – to guide
and orient Catholic religious organizations throughout the world. While those organizations
exist within their own civil jurisdictions and are bound to follow the laws of those
jurisdictions for AML/CFT issues, it is important that the Holy See use its moral
authority to raise maximum awareness about the far too frequent transnational crime
of money laundering and the financing of terrorism.
Beginning along the
path and first accomplishments
Now, let’s see where we are coming from.
The last nineteen months have been months of work and learning. Before starting
this process, we already had a good number of requirements in place. Above all, there
has always been a clear determination to fight money laundering and terrorist financing,
as well as a legal system that already had several of the elements necessary to tackle
ML/FT problems. At the end of 2010, we passed an AML/CFT law and requested evaluation
in February 2011 by MONEYVAL. Our law came into force on April 1, 2011. Our Financial
Intelligence Authority was operational by June. In November 2011, we received our
first MONEYVAL onsite visit. The team of our evaluators was widely considered to be
perhaps the strongest team MONEYVAL had ever assembled. It included the President,
the Secretary and an Administrator of MONEYVAL, the President of the Egmont Group
of Financial Intelligence Units, two senior financial experts, and a Professor of
International Law. We take both the praise and criticism contained in the report with
seriousness.
Revision of the First AML/CFT Legislation
Based
on the preliminary remarks of the evaluators in November, it became apparent that
the first version of the law, while representing an important effort at proper legislation,
contained gaps and other difficulties that needed to be addressed in order to move
forward. All jurisdictions that receive an on-site visit are given two months
time to introduce changes in their legislation, that will be included in the evaluation
report. Within this timeframe, on January 25, 2012 a new law was introduced that provided
for more effective cooperation among the Vatican Authorities involved in the prevention
and countering of money laundering and the financing of terrorism. The new law stressed
the importance of their mutual connections and the need to better allocate their respective
competences in order to establish a stronger and more sustainable system AML/CFT system.
The present AML/CFT system
Now I would like to draw your
attention to some of the more important elements of the current AML/CFT Regime:
The establishment of a risk-based approach to AML/CFT work, particularly
in regard to the identification of suspicious transactions; Enhanced emphasis
on international cooperation, including full exchange of information with foreign
counterparts. And I stress that this includes exchange of information including
information prior to April 1, 2011; Laws relating to financial institution secrecy
are consistent with the international standards; The criminal law is significantly
improved, by providing a comprehensive definition of money laundering, and an array
of predicate crimes in line with the international standards, as well as the criminalization
of the financing of terrorism; The power of the courts to prosecute money laundering,
financing of terrorism, and its predicate crimes, as well as to freeze and confiscate
the proceeds of ML/FT activity has been strengthened; The sanctions for failure
to fulfill AML/CFT requirements are enhanced and made applicable to legal persons; Entering
into a Memorandum of Understanding (MOU) is a requirement for the exchange of financial
information with financial intelligence units from other states. We pledge this to
be an effective and reliable tool for exchanging information on the basis of reciprocity
with those jurisdictions that are also committed to fight money laundering and the
financing of terrorism; The power of the AML/FT supervisor to perform an inspection
of any financial institution is made explicit and the law provides for the creation
of a specific and detailed regulation upon the basis of which that inspection could
be conducted.
In addition, the Holy See, acting also on behalf of Vatican
City State, has ratified the following Conventions:
the Vienna
Convention against Illicit Traffic on Narcotic Drugs and Psychotropic Substances
(1988). the New York Convention for the Suppression of the Financing of Terrorism
(1999) the Palermo Convention against Transnational Organized Crime (2000)
These
Conventions are immediately applicable in our legal system, without any further need
to implement legislation regarding extradition and cooperation. In addition,
the area of international cooperation was carefully assessed The findings of the evaluators
were that the current system of the Holy See and of Vatican City State is largely
compliant with the international standards.
Areas Where Evaluators Noted
a Need for Improvement
We are aware that, like other jurisdictions,
some areas of the Vatican’s systems to fight money laundering and the financing of
terrorism stil need to improve. After the new law was adopted in January, we addressed
many of these issues in the course of our continuing exchanges with the evaluators.
Other issues will be addressed expeditiously and giving proof of effectiveness.
For
example:
There are some concerns expressed in the report regarding
the use of an MOU to establish the basis for international cooperation between financial
intelligence units;
We feel that the adoption of this requirement, which
is in line with international standards, represents the right approach for the Vatican,
which, as a smaller jurisdiction, wishes to interact on fair and fully reciprocal
terms with other countries. Indeed, this is a common choice made by many jurisdictions,
including New Zealand, Canada, Australia and others; nor is this choice disfavored
by such noted FATF members as the United States;
The Pontifical
Commission is mandated by the law to provide for a regulation permitting the AML/CFT
Supervisor to perform on-sight inspections. The evaluators note that until such a
regulation becomes law, the supervisors inspection powers are not yet defined. We
agree. That regulation, which is already being drafted, will reflect our seriousness
of purpose; The report notes that the original structure of a Financial Intelligence
Authority, which combines the financial intelligence unit function and the regulatory
functions of a Supervisor, appears to create difficulties. This structure of the FIA,
which concentrated all AML intelligence and supervision was inherited from the first
version of the law. It was retained in the second version of the law. The evaluators
have expressed certain skepticism as to its “workability” . We are grateful for this
observation which we take seriously; The report notes that conflicts of interest
may arise due to the same person working at the same time in a Supervisor and in one
of the Supervised entities.
Next Steps After Passing the New Law
After
adoption of the present law, the Holy See has continued to improve its anti-money-
laundering system. Above all, the Holy See and the Vatican Authorities have moved
from shorter-term solutions to the creation of long term, sustainable and effective
solutions; and will continue to do.
For example, after January 25, that is
after the above mentioned period of two months following the first on-site visit:
The Holy Sere established and implemented a terrorist list in
line with the measures required by the United Nations Security Council; We have
officially applied to join the Egmont Group, which is the internationally accredited
group of Financial Intelligence Units formed to favor rapid and reciprocal exchanges
of information; Through the execution of memoranda of understanding, we have expeditiously
moved to insert our own financial intelligence authority into the international network
of financial intelligence units; As mentioned, the Cardinal’ Commission for the
Vatican City State is in the process of adopting an inspection regulation; We have
initiated further revision of our criminal law, with a view to further modernize its
provisions in light of the international standards; Shortly we will complete our
risk assessment; We are considering ratification of other crime fighting conventions
and new legislation regarding non-profit organizations.
CONCLUSION
Therefore
the report released today is not an end, but a milestone in our continuing efforts. In
regards to the actual findings, simply stated we obviously wish to strengthen the
overall system; in particular out of the 16 key and core recommendations of the international
standards to fight ML/FT there are 7 areas where the Holy See must and will focus
on. In this light, the report released today is not the end, but is rather an
important passage of our continuing efforts to marry moral commitments to technical
excellence. We have taken a definitive step to lay the foundations to a structure
– a house if you will – that is to a robust and sustainable system to combat money
laundering and the financing of terrorism. Now it is our wish to fully construct a
building that effectively shows the Holy See’s and Vatican City State’s desire to
be a reliable partner in the international community. With pride in what we have
accomplished, tempered by recognition of what we must still do, I now welcome your
questions.
In order to view the documentation from Moneyval, please follow
the link below: