The Vatican is in advanced talks with Italian authorities to end decades of secret banking in the city-state, as Pope Francis presses ahead with his efforts to clean up the finances of the Catholic Church.
The move would mark the latest step in the reform of the Vatican Bank — known as the Institute for Religious Works (IOR) — which has been shrouded in controversy since its founding during the second world war.
“The negotiations are at a good point. There are shared objectives: transparency and information exchange. It’s reasonable to think we could close it by the end of the month,” an official from the Italian finance ministry said on Wednesday.
For years, the IOR has been eyed with suspicion by Italian and global authorities who viewed it as a hub for illicit behaviour, from tax evasion to money laundering. But under intense pressure from governments and other financial institutions, Pope Benedict XVI and now Pope Francis have undertaken sweeping changes to the IOR, closing as many as 3,000 accounts and reforming many of its practices.
Details of the agreement in the works with Italy remain under wraps but Father Federico Lombardi, the Vatican spokesman, also said it would involve “greater and more complete transparency and exchange of information for tax purposes”.
Matteo Renzi, Italy’s prime minister, said in a recent interview with L’Espresso magazine that any deal with the Vatican would be modelled around similar ones agreed in recent weeks with Switzerland, Liechtenstein and Monaco — other tax havens close to home.
If the Vatican agrees to sharing information with Italian tax authorities and anti-money laundering investigators, it would mark a further departure from days in which money could be easily hidden within the walls of the Holy See, some analysts said.
“It’s good news that the Vatican is keeping up with developments elsewhere, and [such a deal] is consistent with the reforms that have been going on there,” said Joshua Simmons, policy counsel at Global Financial Integrity, a Washington-based group that seeks to curb illicit financial flows. “Pope Francis has really made this a priority,” Mr Simmons added.
The Vatican Bank has about €6bn in assets, with most of its 17,000-plus clients being religious orders and Catholic charities operating across the world. Between 2013 and 2014 it brought in Promontory, a Washington-based advisory group, to screen each of its clients for dubious activity and it is now regulated by the Financial Information Authority (AIF), the Vatican financial regulator set up in 2010.
Since last year, the IOR has been led by Jean-Baptiste de Franssu, the French former senior executive at Invesco, the fund manager.
“Our ambition is to become something of a model in financial management rather than a cause for occasional scandal,” Cardinal George Pell, head of economic affairs at the Vatican, said at the time of his appointment.
The biggest scandal almost certainly came more than 30 years ago when Roberto Calvi, the chairman of Banco Ambrosiano, in which IOR was a big shareholder, was found hanging from London’s Blackfriars bridge amid suspicions that he — also known as “God’s banker” — was the victim of Mafia hitmen.
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