* Vatican added for first time to State Department list
* Washington puts tiny state in less vulnerable list
* Vatican tries to join Europe's 'White List'
By Philip Pullella
VATICAN CITY, March 8 The Vatican has for the first time appeared on the U.S. State Department's list of money-laundering centres but the tiny city-state is not rated as a high-risk country.
The 2012 International Narcotics Control Strategy Report was made public on Wednesday and Washington's list of 190 countries classifies them in three categories: of primary concern, of concern and monitored.
The Vatican is in the second category, grouped with 67 other nations including Poland, Egypt, Ireland, Hungary and Chile.
It was added to the list because it was considered vulnerable to money-laundering and had recently established programmes to prevent it, a State Department official said.
"To be considered a jurisdiction of concern merely indicates that there is a vulnerability to a financial system by money launderers. With the large volumes of international currency that goes through the Holy See, it is a system that makes it vulnerable as a potential money-laundering center," Susan Pittman of the State Department's Bureau of International Narcotics and Law Enforcement, told Reuters.
Last year, the Vatican adapted internal laws to comply with international standards on financial crime.
The Vatican is seeking inclusion on the European Commission's so-called "white list" of states who comply with international standards against tax fraud and money-laundering. A decision on its inclusion is expected in June.
"Our aim is to make the 'white list' and we are happy that we have been put in the State Department's less vulnerable category," a Vatican official said, speaking on condition of anonymity.
The category of most vulnerable centres includes all members of the Group of Eight countries, including the United States, Germany, Italy and Russia, because the size of their economies and banking systems can facilitate money-laundering. It also includes small centres such as Britain's Channel Islands.
The State Department's methodology is different from that of the Financial Action Task Force's International Cooperation Review Group (ICRG), which concentrates on a nation's compliance with international law and money-laundering regulations.
VATICAN BANK HAS SCANDALOUS PAST
The Vatican Bank, founded in 1942 by Pope Pius XII, has been in the spotlight since September 2010 when Italian investigators froze 23 million euros ($33 million) in funds in Italian banks after opening an investigation into possible money-laundering.
The bank said it did nothing wrong and was just transferring funds between its own accounts. The money was released in June 2011 but the investigation is continuing.
The Vatican's new financial transparency laws set up internal regulations to make sure its bank and all other departments adhere to international regulations and standards, and cooperate with foreign authorities.
Two months ago, Italian newspapers published leaked internal letters which appeared to show a conflict among top Vatican officials about just how transparent the bank should be about dealings that took place before it enacted its new laws.
The Vatican Bank was formally known as the Institute for Works of Religion (IOR) and was entangled in the collapse 30 years ago of Banco Ambrosiano, with its lurid allegations about money-laundering, freemasons, mafiosi and the mysterious death of Ambrosiano chairman Roberto Calvi - "God's banker". (Reporting by Philip Pullella; Editing by Robert Woodward)