Though the Holy See, including Vatican city state, has made progress combating the threat of money laundering and financing of terrorism through its financial transactions, processes can be improved, says the Council of Europe.
It views the Roman Catholic Church’s money laundering investigations as being protracted because of late responses from foreign parties and under-resourcing in prosecution and law enforcement.
“There has been insufficient specialisation of financial investigators. Consequently, results in court have been modest with only two convictions for self-laundering,” said Moneyval, the Council of Europe’s AML/CTF monitoring body.
Its report highlights the importance the Holy See gives to confiscation. “Although the competent authorities are tracing and seizing proceeds effectively, there is a considerable gap between the amounts seized and those confiscated,” Moneyval said.
The report acknowledges the church has a mechanism to apply United Nations’ sanctions without undue delay. “However, some delays persist in transposing such designations into national lists,” it adds.
Moneyval also comments domestic cases that have raised a red flag for potential abuse of the internal system by mid-level and senior officials for personal or other benefits have not been addressed within the national risk assessment.
The report states the Holy See’s authorities have a generally good high-level understanding of their money laundering and financing of terrorism threats and vulnerabilities, and in general customer due diligence and record-keeping obligations have been applied thoroughly.
“There is a rigorous risk-based transaction monitoring programme that requires the collection of information and documentation as necessary throughout the course of a business relationship,” Moneyval adds.
In an interview with Vatican News Carmelo Barbagallo, president of the Vatican’s supervisory and financial information authority, said: “[They] are an encouragement to do even better, to always keep the quality of the human resources high and to strengthen the activities of all the authorities involved in the fight against money laundering and terrorism financing.”
Moneyval rated the Holy See’s AML/CFT effectiveness as substantial in five areas and moderate in six.
“The ratings given to the Vatican jurisdiction are among the best, better than many countries that are economically advanced and much larger in size,” Barbagallo said.
On Moneyval’s recommendations related to the Vatican’s judicial system, he said they are not difficult to implement since they are mainly procedural and intended to strengthen resources.
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