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Holy See doing well against money laundering, says MONEYVAL

Chris Hamblin, Editor, London, 14 June 2021

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According to the European chapter of the Financial Action Task Force, the world's anti-money-launering standard setter, the Vatican authorities have a 'generally good high-level understanding' of money laundering problems. The resulting report, however, is silent about some things.

In a range of areas, according to the FATF-style regional body (or FSRB), Vatican officials understand 'risk' - presumably the risks that pertain to money laundering - in detail. At one point, these authorities thought that the main risk of money laundering arose from tax evasion by people who did not live in Vatican City. They no longer think of it as the main source of money laundering, but award that honour to internal corruption instead.

Despite this, the report makes not a single mention of Angelo Caloia or Gabriele Liuzzo, which renders it somewhat suspect. Instead, it makes an evasive observation: "Cases which have received wide coverage in the media have raised a red flag for potential abuse of the HS/VCS system by mid-level and senior figures (insiders). The activities leading to these cases were uncovered by the authorities and have led to positive actions since 2014. However, these domestic cases are not addressed within the General Risk Assessment (GRA), which raises some concerns as to the degree to which these matters are formally recognised."

In other words, the report is being evasive about some scandals that have been emblazoned across the Italian press for a long time, which accusing the Vatican itself of being evasive about those same cases.

The name of Swiss lawyer René Brülhart, the well-respected financial intelligence guru who resigned from his post in 2019 as the head of Vatican City's regulatory agency in connection with the scandals, is also totally absent.

MONEYVAL's assessment team thought that the number of suspicious activity reports was reasonable and the quality in recent years good. The report says that internal control measures are generally effective. Readers might take this with a pinch of salt.

The Holy See does not comply with Recommendation 13, on the subject of correspondent banking. The definition of “correspondent relationship” does not apply when an obliged subject has a relationship with a foreign bank. There is no explicit requirement to determine whether a respondent financial institution has been subject to an AML investigation or regulatory action or not. Nor is there any direct requirement for financial institutions to understand their responsibilities clearly.

It is only rated 'partially compliant' with: FATF Recommendation 6, on targeted financial sanctions related to terrorist finance; Recommendation 7, on targeted financial sanctions related to the proliferation of weapons of mass destruction; Recommendation 8, on non-profit organisations; Recommendation 16, on wire transfers; Recommendation 24, on the beneficial ownership of legal persons (i.e. bodies corporate); and Recommendation 27, on the powers of the supervisors (it is not possible for the supervisor to withdraw, restrict or suspend a financial institution’s licence for the most serious cases, which one might expect to be a deal-breaking proposition in the world of AML compliance).

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