Pope tightens oversight of Vatican-linked foundations

Pope Francis has tightened control and oversight over Vatican-based foundations and associations in his latest effort to impose international standards of accounting and governance on Vatican offices

Pope Francis on Tuesday tightened control and oversight over Vatican-based foundations and associations in his latest effort to impose international standards of accounting and governance on Vatican offices and affiliated entities.

A new law aims to bring the Holy See into further compliance with recommendations from the Council of Europe’s Moneyval committee, which in April 2021 flagged as problematic the lack of an overarching law governing the creation and administration of foundations registered in Vatican City.

Such foundations draw donations from the faithful, but until recently they had little oversight or accountability.

The new law lays out strict governance, administrative and accounting regulations that put the foundations under the ultimate oversight of the Vatican’s Secretariat for the Economy, with their books subject to review by the office of the auditor general.

The same Moneyval report that flagged the foundation loophole highlighted as a case study the well-known scandal of the charitable foundation of the Vatican’s Bambino Gesu pediatric hospital, which draws donations from around the world.

The Vatican’s criminal court in 2017 convicted the hospital’s former president of diverting some $500,000 in donations from the hospital foundation to renovate the apartment of the former Vatican No. 2, Cardinal Tarcisio Bertone.

Bertone was never charged, and the original charge of embezzlement was reduced to abuse of office after the president’s lawyers argued that the money was intended as an investment to benefit the hospital because the apartment was going to be used for fundraising events.

The Vatican has several foundations and associations that have Vatican City as their legal headquarters, including some Pope Francis created himself and dedicated to past popes and papal initiatives.

Francis was elected as pope in 2013 with a mandate to clean up the Vatican’s murky finances and to bring international standards of transparency and accountability to them. The reform effort has taken years and spawned a few scandals, including a current criminal trial over a past investment in a London property.

Recently, the Jesuit priest credited with helping bring order to the Holy See’s budgeting as prefect of the Secretariat for the Economy, the Rev. Juan Antonio Guerrero Alves, announced his resignation for medical reasons. His deputy, the lay economist Maximino Caballero Ledo, was named to succeed him.

Source: abcNEWS

The Vatican
The Vatican, also known as the Holy See, is the smallest country in the world, located within the city of Rome, Italy. It is the headquarters of the Catholic Church and the residence of the Pope. The Vatican is an independent state with its own government, laws, and currency, and it is not a member of the European Union.

As a sovereign state, the Vatican has its own financial system, which is separate from that of Italy. The Vatican operates a central bank, called the Institute for the Works of Religion (IOR), which manages the Vatican’s financial assets and issues its own currency, the Vatican lira. The IOR is subject to oversight by the Financial Intelligence Authority (AIF), which is responsible for ensuring that the Vatican’s financial system complies with international standards for combating money laundering and terrorist financing.

In addition to the IOR, the Vatican also has other financial institutions, such as the Administration of the Patrimony of the Apostolic See (APSA), which manages the Vatican’s real estate and investments, and the Prefecture for the Economic Affairs of the Holy See, which is responsible for the Vatican’s budget and financial planning.

The Vatican’s financial operations have been the subject of controversy and scrutiny in recent years, due in part to allegations of money laundering and other financial crimes. In 2013, the Holy See signed an agreement with Italy to improve transparency and cooperation in financial matters, and in 2019, it joined the Financial Action Task Force (FATF), an international organization that sets standards for combating money laundering and terrorist financing.

Despite these efforts, concerns remain about the Vatican’s financial system, particularly with regard to its lack of transparency and its potential vulnerability to money laundering and other financial crimes. In 2020, the European Banking Authority (EBA) included the Vatican on its list of high-risk jurisdictions, citing “strategic deficiencies” in its anti-money laundering and counter-terrorist financing framework.

Overall, the Vatican’s financial system is a complex and often opaque system that is not subject to the same level of oversight and regulation as other countries. While the Vatican has taken steps to improve transparency and compliance, concerns remain about its potential vulnerability to financial crime.

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