* Prosecutors suspect two former Vatican bank executives
* Allegations related to incomplete data on bank transfers
* Transfers alleged to have infringed money laundering laws
* Vatican bank has long been questioned over standards
By Lisa Jucca and Mario Sarzanini
ROME, July 15 Prosecutors allege two former top
executives at the Vatican bank repeatedly broke Italian laws on
money laundering by failing to give sufficient information when
ordering multi-million-euro bank transfers, according to
judicial documents seen by Reuters.
While the prosecutors stopped short of accusing two men who
were until recently the top officials at the Vatican bank of
money laundering, they said confusion over the handling of IOR
accounts had created the conditions where it could take place.
Key details missing on requested transfers included the
identity of the owners of the funds and the reason for transfer.
The Institute for Works of Religion (IOR), as the Vatican
bank is formally known, has long been in the spotlight for
failing to meet international standards intended to combat tax
evasion and the disguising of illegal sources of income.
A report by European watchdog Moneyval last year said the
Vatican state, despite some progress, failed to meet some
critical financial transparency standards.
The allegations by prosecutors in Rome investigating
possible breaches of the rules, which have not yet been made
public, are the latest blow to the Vatican bank, which has been
under pressure since Italy's central bank ordered Italian banks
to enforce strict transparency criteria when dealing with it.
Italy, along with other EU nations, adopted a 2005 European
Union directive on fighting money laundering in 2007. The law
introduced a number of measures intended to increase financial
transparency and block or uncover illicit money flows.
The two men, former IOR director general Paolo Cipriani and
former deputy director general Massimo Tulli have not been
charged with any crime. Based on the results of the probe, a
judge will determine if there is sufficient evidence to charge
them. Cipriani's lawyer Vincenzo Scordamaglia said the events at
the centre of the investigation took place several years ago and
declined to comment when Reuters contacted him by telephone.
Elisa Scaroina, listed in the prosecutors' document as a
lawyer for Tulli, said she no longer represented him. It was not
possible to reach Tulli.
The future of the bank is in doubt after Pope Francis last
month set up a special commission to reform it. Vatican sources
said in April the pope, who has said he wants the Church to be a
model of austerity and honesty, could decide to radically
restructure the bank or even close it.
The allegations were contained in two documents filed by
prosecutors with a Rome court detailing a long-running
investigation into alleged breaches of anti-money laundering
laws that ended two weeks ago. The prosecutors focused on 15
irregular bank transfers ordered by Cipriani and Tulli to bank
accounts in Italy and Germany. The transactions were deemed
irregular as they did not provide details on the origin of the
money and on the reason for the bank transfers.
The prosecutors do not at any stage in the documents suggest
that the transfers were related to the illicit funding of
Authorities around the world have stepped up pressure over
the last decade on illicit financing of criminal activities and
money laundering by introducing strict rules which require the
origin of financial flows to be detailed.
Among the regulations, banks are obliged to verify the
identity of customers. Money transfers that originate in non-EU
states that do not comply with these stringent anti-money
laundering rules are subject to stricter scrutiny.
In the documents, Italian prosecutors said former IOR
Chairman Ettore Gotti Tedeschi, who attempted to improve
practices at the IOR before he was fired in 2012, was no longer
under investigation. His lawyer, Fulvio Palazzo, was not
immediately available for comment.
In all the transactions detailed, the IOR failed to report
who the money belonged to when it was transferred, which broke
Italian rules aimed at preventing money laundering, the
prosecutors said. Prosecutors did not allege that the sums
involved were part of illicit financing or criminal activities.
In the largest transfer, prosecutors say that Cipriani and
Tulli signed a fax on Sept. 6, 2010, ordering 20 million euros
($26 million at today's rate) be moved from an IOR account at
Credito Artigiano, a small Italian bank owned by Credito
Valtellinese, to a Frankfurt-based IOR account with JP
Morgan. JP Morgan and Credito Valtellinese both declined
Another fax sent on the same day by Cipriani and Tulli told
Credito Artigiano to transfer 3 million euros to an IOR account
at small Roman bank Banca del Fucino, prosecutors allege in the
document. That bank declined to comment.
In both cases, Cipriani and Tulli are alleged to have
refused to provide details of the origin of the money to Credito
Artigiano and the reason for the transfer, prompting Credito
Artigiano to alert the Bank of Italy, which oversees Italy-based
banks, of a failure to follow guidelines.
Credito Artigiano's report eventually led prosecutors to
freeze the 23 million euros of funds, and triggered a
wide-ranging probe into possible money laundering at the IOR,
which declined to comment on the allegations.
"The seizure in question is just an example of a much
broader reality," prosecutors said in one of the documents, in
which they accuse IOR managers of "deliberately undervaluing and
refusing to comply with anti-money laundering requirements".
Cipriani and Tulli resigned abruptly, without giving
reasons, two weeks ago.
The tiny Vatican state, which legally lies outside the
European Union, does not yet fully comply with international
rules to combat money laundering. It is taking steps to address
this, however, including by setting up a financial supervisory
In the documents seen by Reuters, prosecutors said there was
"total confusion" regarding the IOR's accounts with Credito
Artigiano and other Italian banks, making it impossible to
identify the clients involved. The banks declined to comment.
Credito Artigiano is not under investigation.
By statute, only members of religious orders, bank employees
and Vatican citizens can open an account with the IOR, but
prosecutors allege it was possible that lax practices within the
bank meant IOR clients could allow the use of their accounts for
In the absence of strict adherence to international
standards, "the IOR could easily become a channel for the
laundering of money related to crime", the prosecutors say in
one of two documents they have produced.
The 23 million euros seized in 2010 by Italian prosecutors
as a result of an alleged breach of the law were released a year
later after the Holy See introduced a number of measures to
improve supervision, including the setting up of an independent
Credito Artigiano declined to say whether IOR had had access
to those funds and whether it still had a client relationship
with the IOR.