VaticanBank

In an announcement last week, the papal office revealed Pope Francis will not close the troubled Vatican Bank. Also known as the Institute for Religious Works, the Vatican Bank had been mired in controversy after rumors of alleged money laundering and Mafia links emerged. This statement puts an end to the speculation over the future of the bank.

Instead of closing down the bank, Pope Francis has instead advocated a complete reform of the Institute for Religious Works. Strict regulatory supervision is to be introduced and measures will be made to improve compliance and transparency. Operational improvements are to be introduced and the bank is to be merged with other Vatican financial institutions. In addition, clients are to be screened and thousands of accounts have already been shut down. Accounts that appear to show suspicious activity are to be investigated and anti-money laundering regulations have been introduced.

Consultants have been brought in to check through lists of clients, annual accounts are made available, and further reforms are likely to be introduced; however, it has not yet been made clear what these reforms will be.

Earlier this year, Pope Francis announced the creation of a central office. The office has been named the Secretariat for the Economy; its function is to oversee Vatican economic issues and it is led by Australian Cardinal George Pell, who is required to report directly to the pope.

Rumors surrounding the bank’s dealings had circulated for decades and in 2012 Ettore Gotti Tedeschi, a former president of the bank, was fired after millions of dollars were seized from a Vatican bank account by Italian prosecutors; the move followed allegations of money laundering and a former accountant is just one of a number of people awaiting trial over money laundering allegations.

The news of the reforms have been described as critical to the future of the Bank and the Vatican has been described as making “significant progress” when it comes to introducing reform. However, some were surprised by the news, as Pope Francis had previously indicated that the bank could be closed. Others stated that the announcement is a sign that Pope Francis is pleased with the reforms that have been introduced so far.

The Institute for Religious Works was first opened in 1942 and was established to manage money for religious institutions, clergy, and employees at the Vatican.

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