Amid scandals of money laundering & tax evasion, the Vatican has agreed to submit financial information to the US in an effort to increase transparency.
Last week, the Vatican officially agreed to share tax information with the United States from their Institute for Religious Works, the Vatican bank. Archbishop Paul Gallagher, who serves as the secretary for relations with States of the Holy See, says that this move is for a “long-term strategy” that will promote “legality, transparency and ethical behavior”. They have been working towards reforming their financial institution ever since they were first accused of money laundering and tax evasion by the Italian government. The agreement was signed by Vatican and United States officials that will ensure they follow the 2010 law that requires foreign banks must share tax information about US account holders. Many of the account holders are wealthy Americans attempting to dodge the IRS.
The United States is estimated to lose around $100 billion each year in taxes thanks to Americans registering with foreign banks and avoiding the IRS, according to a 2008 report from the US Senate Permanent Subcommittee on Investigations. In essence, according to Paul Gallagher, these Americans are “stealing both from the State and from the poor.” Currently, 62 countries, including the Vatican, have signed the agreement to share tax information with the US. For the Vatican, that is only about 150 out of 15,181 account holders. However, there are many banks that have far more US clients.
Any foreign bank that has not agreed to share the information with the US is subjected to a 30% fee for transactions, and American banks have been withholding that 30%. There are 50 countries that have agreements “in substance.” The Ambassador to the US, Kenneth Hackett, has stated that preventing and stopping tax evasion “may be one of the most effective options” to eliminating world poverty. The Vatican has also signed a similar agreement with Italy.