Pope Signs Vatican Financial Transparency Measures

VATICAN CITY, December 30, 2010--Pope Benedict XVI has instituted a new agency to monitor all Vatican financial operations and make sure they meet international norms against money-laundering and the financing of terrorism.

The pope issued an apostolic letter Dec. 30 that established the Financial Information Authority as an independent agency to oversee the monetary and commercial activities of all Vatican-related institutions, including the Vatican bank.

At the same time, the Vatican promulgated a detailed new law that defined financial crimes and established penalties -- including possible jail time -- for their violation. The list of transgressions includes corruption, market manipulation, fraud and virtually any activity that facilitates or provides funding to acts of terrorism. The new law, which reflects the latest European Union regulations, takes effect April 1.

The pope's brief apostolic letter said the Vatican fully supported the international community's efforts to coordinate a response to financial crimes, which often involve more than one country.

"In our age of increasing globalization, peace is unfortunately threatened by many factors, including an improper use of the market and the economy, and the terrible and destructive violence perpetrated by terrorism, which causes death, suffering, hatred and social instability," the pope said.

The creation of such an oversight agency is unprecedented at the Vatican, where several departments have operated with some degree of financial independence for decades or centuries.

The Vatican spokesman, Jesuit Father Federico Lombardi, described the move as a courageous step that reflects the moral requirement of "transparency, honesty and responsibility" in the Vatican's operations.

"Vatican organizations will be less vulnerable in the face of the continuous risks that inevitably arise in the handling of money. Those errors which so quickly become the cause of 'scandal' for public opinion and the faithful will be avoided," Father Lombardi said.

"In the final analysis, the church will be more credible before the members of the international community, and this is of vital importance for her evangelical mission," he said.

The move came several months after Italian treasury police, in a money-laundering probe, seized 23 million euros (US$30 million) that the Vatican bank had deposited in a Rome bank account. The Vatican criticized the confiscation, saying the deposit was legitimate and that the Vatican bank was committed to "full transparency" in its operations.

The Vatican has been working for some time with Italian and international authorities to comply with procedures that ensure funds are not used for terrorism or money-laundering. The new documents represent the fruit of those efforts.