Vatican now claims ‘most virtuous’ financial safeguards [News/Analysis]

July 15, 2021

In its story on the annual report made public July 15 by the Vatican’s Supervisory and Financial Information Authority (ASIF), Vatican News makes a sweeping claim:

The Holy See ranks among the most virtuous jurisdictions in the world in certain areas, such as finance, the fight against money laundering and the financing of terrorism.

Some observers, reading the recent headline stories about financial complications involving the Vatican, may think otherwise.

The ASIF report took credit for flagging 89 cases of “suspicious financial activities” in 2020, as compared with only 64 such cases in 2019. Those figures do back ASIF’s claim of “an increasing trend” toward stricter oversight.

However, as the European banking regulators at Moneyval observed, detecting suspicious activity is only part of the battle. The other key factor is punishing violations. Moneyval has never given the Vatican high grades for prosecuting offenders. The ASIF account for 2020, which shows 16 cases referred to Vatican prosecutors, shows only a minimal increase from the 15 such cases the previous year.

The 52-page report from ASIF does show a major increase in the activities of the office. Under new leadership, with an expanded staff and a stronger mandate, ASIF greatly increased its cooperation with financial regulators in other jurisdictions. This year’s Moneyval report gave the Vatican high grades in many areas, acknowledging that ASIF had made enormous strides in eliminating the dangers of money-laundering. The ASIF report rightly boasts that the Holy See now compares favorably with most of the world’s countries in its defenses against financial misconduct.

“The year 2020 was one of important and profound changes” for ASIF, the annual report proclaims. The office—formerly known more simply as the Financial Information Authority (AIF)—had a new president, Carmelo Barbagallo, to go with its new name. The Vatican continued to tighten rules for financial transactions, demanding greater accountability and allowing greater scrutiny. The Moneyval report represented a new high-water mark in the Vatican’s relations with international banking regulators.

Still there remains that pesky issue of prosecution. ASIF has now identified scores of cases in which financial transfers were suspicious enough to warrant prosecutors’ attention. Yet to date there has not been any prominent official convicted of financial misconduct.

Moneyval called attention to the Vatican prosecutors’ penchant for pursuing crimes by low-ranking officials, saying that this pattern “raised a red flag for potential abuse of the internal system by mid-level and senior figures (insiders) for personal and other benefits.” Even now, with the Vatican awaiting the high-profile investigation of ten people, including one very prominent cardinal, there are questions as to why an even more prominent prelate—the Secretary of State—has escaped serious scrutiny.

And then there is the steady stream of headline stories, which do not inspire confidence in the Vatican’s handling of financial affairs:

• The former president of ASIF (back in the days when it was AIF), René Brülhart, doubled as a paid consultant for the Secretariat of State, coordinating financial transactions that his office would be called to supervise. Significantly, Brülhart’s lawyer does not deny the existence of this consulting arrangement, despite the clear conflict-of-interest concerns involved.
• A former lay employee of the Secretariat of State, Fabrizio Tirabassi, was paid a commission by a Swiss bank for funds his office deposited there. Again, his lawyers do not deny the arrangement; they claim that it was approved by Tirabassi’s superiors.
• Earlier it was revealed that Tirabassi was given a post as director of a corporation involved in a questionable London real-estate deal. Again the conflict-of-interest questions loom large, as do the Moneyval questions about “potential abuse of the internal system…for personal and other benefits.”
• Today’s news brings the story of a man who controlled Vatican investments, and allegedly talked senior Vatican officials into approving an investment in a non-existent American railroad project. Enrico Crasso now faces criminal charges for that gambit. The Pillar news site reports: “Crasso’s stewardship of Church funds has been the subject of years of media scrutiny.” If the media had been raising questions for years, why was he still given free rein?
• Also in today’s news, a group of Italian con men have been arrested by carabinieri and charged with representing themselves as Vatican officials in a scheme to dupe businessmen. The Vatican cannot be blamed for this con game. But it is noteworthy that the scheme worked only because some Italian businessmen believed that Vatican officials could and would make chancy investments on their own initiative. That perception speaks volumes about the general public perception of Vatican financial probity.

 

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Further information:

• 2020 ASIF Report shows constant improvement (Vatican News)
• Supervisory and Financial Information Authority, Annual Report