Jean-Baptise de Franssu, left, current president of the Vatican bank, former President Ernst Von Freyberg, right, and Australian Cardinal George Pell, prefect of the Vatican Secretariat for the Economy, leave at the end of a news conference at the Vatican July 9, 2014. The Vatican said it will separate its bank's investment business from its church payments work to try to clean up after years of scandal, including allegations of money laundering and tax evasion. CNS photo/Tony Gentile, Reuters

Vatican bank launches legal action in Malta over major investment loss

  • October 10, 2017
VATICAN CITY – The Vatican bank has initiated legal action in Malta against unnamed third parties because of "significant damages" incurred after a 17-million-euro investment.

The bank, formally known as the Institute for the Works of Religion, recently turned to judges in Malta to start civil action "against various third parties deemed liable of having caused significant damages" regarding "certain investment transactions in which it participated," the Vatican press office said Oct. 10.

Greg Burke, Vatican spokesman, told journalists the transaction involved "an initial investment of 17 million" euros made at the beginning of 2013. Determining the amount of total damage incurred would be up to the court in Malta, he added.

Launching the legal action demonstrates the bank's desire "to accept responsibility for abuses in the past," he said.

According to the written communique, such a move also reflects the bank's "commitment, in the interest of transparency, to report to the competent authorities any potential abuses perpetrated against it and to take, as in this instance, any appropriate action to protect its financial and reputational interests, including outside of the Vatican City State."

Pope Benedict XVI began a series of reforms in 2010 to increase oversight, transparency and accountability of the Vatican's financial activity. Top management at the bank saw a number of major changes over those years, including the July 2013 resignation of its director and the deputy director, Paolo Cipriani and Massimo Tulli, who were later found guilty of money laundering by a Rome court.

Bank management again saw a major restructuring in 2014 as part of the larger reform of all Vatican financial institutions directed by the new Secretariat for the Economy.

In 2016, about 15,000 clients had nearly 6 billion euros in assets at the institute, which primarily invests in "very low-risk" financial instruments, according to its website. Individuals and entities allowed to have an account at the institute are Catholic institutions, clerics, employees or former employees of Vatican City State with salary and pension accounts, and embassies and diplomats accredited to the Holy See.

The latest report of MONEYVAL, the Council of Europe's anti-money laundering and counterterrorist financing body, found in 2015 that the Holy See had addressed most gaps in its laws and norms. However, it said there was still a greater need for implementing its anti-money laundering and counterterrorist protocols in terms of prosecutions, convictions and confiscating assets.

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