UPDATE 1-Vatican Bank to publish yearly report, launch website
* Trying to shed reputation as world's most secretive bank
* Bank will hire international auditing firm (Adds bank to be audited by its internal financial authority)
By Philip Pullella
VATICAN CITY, May 16 (Reuters) - The Vatican Bank, a centre of scandals for decades, is to launch its own website and publish its annual report in an effort to increase transparency, its new president said.
Ernst von Freyberg told the bank's employees of the changes, which should be in place by the end of the year, this week, according to Vatican Radio.
He also said the bank, formally known as the Institute for Works of Religion (IOR) and dubbed the world's most secretive bank by Forbes magazine, had also hired an auditing firm to make sure it meets international standards against money laundering.
Vatican Radio did not name of the firm.
Freyberg was appointed in February to take the place of Ettore Gotti Tedeschi who was fired last May.
Gotti Tedeschi said he was dismissed because he wanted more transparency but the board, made up of international financial experts, said he had neglected basic management responsibilities and alienated staff.
His abrupt departure, along with the arrest of Pope Benedict's butler for stealing confidential papal documents, came during a leaks scandal that shook the Vatican last year and contributed to Benedict's decision to resign.
The Vatican has been trying to shed its image as a murky financial centre since 1982, when Roberto Calvi, known as "God's Banker" because of his links to the Vatican, was found hanging from London's Blackfriars Bridge.
Calvi was head of the Banco Ambrosiano, then Italy's largest private bank, which collapsed in a fraudulent bankruptcy. The Vatican bank owned part of the Ambrosiano.
In July, a European anti-money laundering committee said the Vatican Bank failed to meet all its standards on fighting money laundering, tax evasion and other financial crimes.
The report by Moneyval, a monitoring group of the 47-nation Council of Europe, found the Vatican had passed only nine of 16 "key and core" aspects of its financial dealings.
The Vatican has vowed to make changes to meet the standards, and will present a progress report on the Moneyval recommendations at the end of the year, a Vatican official said.
The bank itself will be audited by the Vatican's internal regulator, its Financial Information Authority, or FIA, the official said.
Earlier this month, in another move towards transparency, the Vatican's FIA signed a memo of understanding with FinCen, the U.S. agency that tracks suspicious financial transactions.
In 2010, Rome magistrates froze 23 million euros ($33 million) held by the IOR in an Italian bank.
The Vatican said at the time that its bank was merely transferring its own funds between its own accounts in Italy and Germany. The money was released in June 2011 but the investigation continues.
Pope Francis, who was elected in March to succeed Benedict, could enact a major restructuring of the bank or even eventually decide to close it, Vatican sources have said. But the prospect of total closure is remote.
The bank primarily handles funds for Vatican departments, Roman Catholic charities and orders of priests and nuns around the world. (Editing by Louise Ireland)
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