Italy and the Vatican on
Wednesday signed an agreement to exchange financial information
as part of efforts to fight tax evasion and money laundering.
The Vatican said the deal meant Italy was "the first
country with which the Holy See has signed an agreement that
regulates information exchange".
The deal will make it possible for Vatican and Italian
authorities to swap details of taxable sums since January 1,
2009.
"Italy and the Holy See are even closer with the signing
of this convention on tax affairs," Paul Richard Gallagher, the
Holy See's secretary for relations with states, told Vatican
daily L'Osservatore Romano.
"More stable institutional and legal bonds are being added
to the historic links".
Gallagher added that the agreement would apply to Vatican
employees and retired Holy See staff living in Italy, as well as
other people and institutions, such as religious orders, holding
money in the Vatican bank, the Institute for the Works of
Religion (IOR).
"The agreement is an important step forward that continues
the road of tax transparency and will reinforce the mechanism of
voluntary disclosure," said Italian Economy Minister Pier Carlo
Padoan.
The deal is the latest step in the Vatican's drive to
clean up its act on financial transparency, after a series of
scandals hit the IOR, since Pope Francis was elected to the helm
of the Catholic Church two years ago.
The problem of misuse of IOR accounts has been addressed
to some degree, with the closure of accounts of people who
are not clergy or Holy See employees.
As of July, the Vatican bank had blocked the accounts of
2,000 clients and ended some 3,000 "customer relationships".
In recent months, Italy has signed tax treaties with
Switzerland, Monaco and Liechtenstein to increase transparency
and break down barriers created for tax collectors by bank
secrecy regulations.
The IOR hailed the deal.
"The IOR favourably welcomes the tax accord concluded
between the Holy See and Italy, which brings to completion
months of intense and complex work," said a spokesman for the
Institute for the Works of Religion (IOR), the bank's official
name.
"The agreement ensures our customers (CCD) clarity and
certainty in terms of rights and obligations to the Italian tax
authorities".
"As announced, the IOR will support its customers so that
the new regulatory framework is fully adopted in the coming
months, on the basis of procedures to be approved by the
competent authority of the Holy See".
Early this month, Vatican sources said the deal would not
regard the position of individuals with accounts in the Vatican,
as this area has been effectively dealt with via recent reforms,
but look at the Italian tax authorities' interest in the money
transfers of Italian-based religious orders.
Cleaning up the IOR and the Vatican's financial management
has been a priority for Francis.
The statutes of the Council and Secretariat for the
Economy, two bodies established by Pope Francis in February 2014
to oversee Vatican finances, came into force on March 1.
The two documents were published on the Vatican website,
along with the statute of the Office of the Auditor General,
which also entered into force on the same day.
The 15-member Council for the Economy is mandated to offer
"guidance on economic management and [supervise] the structures
and the administrative and financial activities of the
Dicasteries of the Roman Curia, of the Institutions connected to
the Holy See, and of Vatican City State" according to the motu
proprio document that established it.
Implementation of policies established by the council is
overseen by the Secretariat headed by Australian Cardinal George
Pell, while all financial accounts are subject to controls by
the Office of the Auditor General.
Last July Pell named a new IOR chief as the Vatican's
moves to gain spotless anti-money-laundering credentials clicked
into a new gear.
Frenchman Jean-Baptiste de Franssu became IOR president on
July 9 while his predecessor Ernst von Freyberg remained on
board for a month or so to ensure a smooth transition.
Other new IOR Board of Directors appointees included
Monsignor Alfred Xuereb, named Secretary without voting rights,
as well as German Clemens Boersig, American Mary Ann Glendon,
and Brit Michael Hintze.
The new head was unveiled a day after the IOR saw its
profits for 2013 plummet amid the reform efforts.
IOR posted net profits of 2.9 million euros in 2013, down
from 86.6 million euros the previous fiscal year.
In related and slightly controversial news, IOR lost over
15 million euros in 2013 in a TV operation that gained headlines
for the wrong reasons.
Former Vatican secretary of state Cardinal Tarcisio
Bertone in 2012 arranged for IOR to extend a loan to Italian TV
production company Lux Vide, owned by his long-time friend and
former head of RAI State TV, Ettore Bernabei.
The loan showed up in the IOR's books as a "free transfer
of shares equal to 15.1 million euros to a Holy See foundation".
The operation fell under the lens of Rome prosecutors and
Italian finance police in May, after the Holy See denied a
news report that Bertone was under investigation by Vatican
prosecutors for alleged embezzlement.
German magazine Bild, citing "unofficial" Holy See
sources, said the once-powerful official embezzled 15 million
euros from Vatican coffers at the end of 2012.
Those controls fell under a larger probe into the Vatican
bank regarding suspected violations of anti-money laundering
norms.
IOR has had a chequered history.
In a blow to its standing a year ago, Rome magistrates
indicted its former general manager, Paolo Cipriani, for
allegedly breaking Italy's laws against money laundering.
They also indicted Cipriani's former deputy, Massimo
Tulli.
The trial, which is ongoing, is related to a probe that in
2010 led to the freezing of 23 million euros over two cash
transfers involving the bank that were deemed suspicious.
Earlier in March last year a Rome judge upheld a request
from prosecutors for a probe into the former head of the Vatican
Bank, Ettore Gotti Tedeschi, over the same case to be shelved.
Gotti Tedeschi resigned from the bank in May 2012
following a no-confidence vote by the supervisory board, amid
reported disagreements on efforts to get the Vatican on the
white list of financially transparent countries.
Italian banks effectively stopped dealing with the IOR in
2010 after the Bank of Italy ordered them to enforce strict
anti-money-laundering criteria to continue working with it.
From January 1 to February 12, 2013, the Bank of Italy
froze all credit-card and ATM transactions inside the Vatican
City over its failure to fully implement international
anti-money-laundering standards.
The Council of Europe's Moneyval agency, a monitoring
group of financial experts, recently praised the Vatican's
progress in trying to get onto the white list of countries with
strong credentials on combatting financial crime.
In January 2014 the Vatican Bank resumed normal relations
with Italy after implementing moves to prevent money laundering
and other financial crimes.
There have been many allegations that the IOR was used to
launder money, most notably by 'God's Banker' Roberto Calvi, the
former head of Italy's biggest private bank, whose body was
found hanging under Blackfriar's Bridge in London in 1982, a
suspected victim of the Sicilian mafia.
The IOR was also named in kickbacks probes stemming from
the 1990 collapse of public-private chemicals colossus Enimont,
part of the Clean Hands investigations that swept away Italy's
old political establishment.
In recent years there have been a series of Italian TV
reports and a best-selling book claiming to show how individuals
used the IOR to squirrel away money, dodging Italian
regulations.
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