European experts on preventing financial crimes praised the Vatican for significant steps in establishing laws and procedures in line with international protocols, but called for "real results" in cracking down on infractions and prosecuting offenses.
Moneyval—the Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism—said the Vatican has addressed "most of the technical deficiencies in its legislation and regulations."
"However, there is a need now for the anti-money laundering and counterterrorist financing system to deliver effective results in terms of prosecutions, convictions and confiscation" of criminal assets, the experts said in a press release Dec. 12.
The Moneyval committee approved the Holy See-Vatican progress report at a meeting Dec. 8 in Strasbourg, France, and published its assessment of the Vatican's report on its website Dec. 15.
The Moneyval report said the Vatican showed significant progress in implementing recommendations Moneyval made in July 2012. The Vatican had met nine out of 16 key and core recommendations, thereby passing a major test in an effort to become more financially transparent and compliant with international norms.
The recommendations included improving record keeping; developing procedures for reporting suspicious transactions; enacting procedures to report transactions suspected of financing terrorism; ensuring there were procedures for confiscating accounts; making certain secrecy rules do not impede the prevention of financial crimes; and designing procedures for freezing and confiscating terrorist assets.
The Moneyval report said the Vatican's stepped-up efforts in reviewing bank accounts meant that the number of "suspicious activity reports has risen sharply since the last report," numbering 329 reports between January and September.
Vatican prosecutors have received 30 reports for investigation, have frozen about 11 million euros and have launched 29 money-laundering investigations, the report said.
"However, no indictments or prosecutions have, as yet, been brought in money-laundering cases," it said.
For example, it said the three cases reported in the first progress report in 2012 are still open and should have no obstacles in coming to a conclusion since they do not involve any other countries or foreign jurisdictions. Another money-laundering investigation opened in 2013, which resulted in the seizure of almost 2 million euros, is also still open, although "it is understood" that the prosecutor is now deciding on the next steps to take.
Even though the systems for reporting suspicious and illegal accounts and transactions are in place and are actively flagging cases, "there still remains, however, a continued lack of indictments for money laundering or for related serious proceeds-generating offenses in the three years" since procedures went into effect. "This situation needs to be improved," the report said.
Experts recommended that the Vatican make sure the Vatican police and prosecutor's office "have the capacity to conduct proactive financial investigation in order to deliver real results in the money laundering investigations that are underway." And it called for "ad hoc agreements" with foreign countries in order to expedite prosecution for cases involving cross-border crimes.
In a memo released late Dec. 15, the Vatican press office reiterated the experts' findings that notable progress had been made.
It said the investigations underway by the prosecutor's office "are complex from a technical point of view and require careful study," the memo said, referring to situations where crimes were committed or involve people outside of Vatican territory. However, it said the Vatican court is receiving cooperation and assistance from the other countries involved.
The memo said the Vatican welcomed Moneyval's suggestion to strengthen its ability to conduct investigations in a way that is "more incisive" concerning sentencing and crimes -- related to money laundering and financing terrorism -- committed in Vatican City or linked to the Holy See.
The Moneyval committee said the "intensive review process" of surveying and identifying account holders at the Institute for the Works of Religion, commonly known as the Vatican bank, "appears to have been a success."
Almost 4,800 accounts had been closed according to stricter guidelines for identifying and verifying customers entitled to hold accounts there, indicating that "these guidelines are now being followed strictly."
The report confirmed the Financial Intelligence Authority, the Vatican's oversight agency, carried out a full inspection of the Vatican bank in 2014 and gave the bank a follow-up action plan. The intelligence authority was set to conduct a full inspection of the Administration of the Patrimony of the Holy See, which handles Vatican investments and real estate holdings, in December 2015.
By December 2017, the Vatican is expected to present an update on what steps have been taken to implement recommendations.