AP Interview: Vatican's 007 on money-laundering
AP Interview: Vatican's 007 on money-laundering
Jul. 05, 2013
VATICAN CITY (AP) — The revelations of wrongdoing currently rocking the Vatican bank couldn't have come at a worse time for the Swiss-born anti-money laundering expert hired to lead the Holy See's push for greater financial transparency.
Rene Bruelhart was heading to Sun City, South Africa, for the annual meeting of the Egmont Group, a gathering of financial information agencies from 130 countries, when the Vatican announced that its top two bank managers had resigned amid a blossoming financial scandal involving a Vatican accountant.
The two executives were responsible for implementing the Vatican bank's much-touted anti-money laundering efforts, but a preliminary internal investigation showed "clear failings" in the way the accountant's transactions were handled.
Despite the news, the Holy See won coveted membership in the Egmont Group this week, joining a club that aims to share financial information in the global fight against money laundering and terror financing.
For Bruelhart, dubbed the "James Bond of the financial world" by some media, joining Egmont means that the Vatican now is part of a trusted "family" and has more help in combating financial crimes — even if it can't root them out entirely.
"With this membership, we are a credible player in the international and global fight against money laundering and terror finance," Bruelhart said in a telephone interview Thursday from Sun City. "They trust us. That is very important."
The Egmont Group, which was created in 1995, aims to smooth the exchange of information and improve cooperation among its members. Those members are the financial intelligence units of countries' central banks — the departments that collect and investigate reports of suspicious financial transactions.
Bruelhart headed Liechtenstein's financial intelligence unit for eight years, and led the Egmont Group for two before being tapped by the Vatican as a consultant last year. The Holy See eventually named him director of its own financial intelligence unit to oversee all its financial activities. Then-Pope Benedict XVI created the Financial Intelligence Authority, or AIF, in 2010 as part of the Vatican's push to comply with international norms to fight money laundering.
The Vatican's newborn AIF was faulted on several fronts when it was evaluated last year by independent European inspectors, though a follow-up evaluation is scheduled for December.
Bruelhart has said that amended laws and regulations are in the works ahead of the December progress report, and that for now the Holy See was content to have passed the milestone with Egmont. Asked how Egmont could have cleared the Holy See when there are still clearly problems at the bank, Bruelhart stressed the Egmont evaluation criteria was transparent and formal, with on-site visits and evaluations of its legislative framework and regulations.
"No country in the world is 100 percent perfect," he said. "What's important is if something is happening, you have the competent authority and you have the tools and measures to take relevant action."
The Vatican has certainly shown that it is far from perfect.
Last week, Pope Francis named five people to head a commission of inquiry into the Vatican bank, the Institute for Religious Works, or IOR, to get to the root of the problems that have plagued it for decades and mired the Vatican in scandal over the years.
Two days later, a Vatican accountant, Monsignor Nunzio Scarano, was arrested in an alleged plot to smuggle 20 million euros from Switzerland to Italy without declaring it at customs. On Friday, a judge denied Scarano's bid for house arrest and ordered him to remain at Rome's Queen of Heaven prison until a decision is made as to whether to indict him.
Then at the start of this week, the top two managers at the IOR resigned. Their boss, bank president Ernst von Freyberg, had just weeks earlier praised Paolo Cipriani and Massimo Tulli as "truly happy" and helpful collaborators as the bank worked to comply with anti-money-laundering norms.
By Monday, von Freyberg said it was clear that the bank needed new leadership "to increase the pace" of the IOR's transformation — a suggestion that the two managers had in some way held back that transformation.
And by the end of the week, von Freyberg was even more blunt in briefing the bank's board about the Scarano case.
"The internal investigation that I have initiated has proven effective and discovered clear failings," von Freyberg told the board, according to excerpts of his remarks obtained Friday by The Associated Press. "That should serve as a stark reminder of the urgency of improving (the) IOR's processes."
He said the bank was reviewing each of the IOR's 19,000 accounts "and we will systematically identify and eradicate wrongdoing of clients in our institute."
The next step for Bruelhart is to ink a bilateral agreement with Italy to share financial information — a critical step given that the Italians have been the harshest critics of the Vatican's murky financial dealings, convinced that people have used the IOR to shield money from Italian tax authorities. As it is, Italian prosecutors have various investigations under way targeting the Vatican bank and people who may have used it for less than holy ends.
"We've identified the countries which are of relevance and important for us, and amongst them is Italy," Bruelhart said.
One of those Italian investigations formally wrapped up on Friday as prosecutors prepare to request indictments: In 2010, Rome prosecutors placed Cipriani and the IOR's then-president, Ettore Gotti Tedeschi, under investigation for allegedly violating Italy's anti-money-laundering norms with a routine bank transaction involving an IOR account at an Italian bank. Police seized 23 million euros, though it was later ordered released.
Italian news reports said prosecutors would exonerate Gotti Tedeschi, given he had nothing to do with the day-to-day functioning of the bank, but would likely seek indictments against Cipriani and Tulli, though the exact nature of the accusations against them remains unclear.
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