By Steve Scherer
VATICAN CITY (Reuters) - Pope Francis made a key appointment to the Vatican bank on Saturday, part of a clean-up of the institution which has a history of murky financial dealings and is being closely watched by the European money-laundering watchdog.
Francis backed the naming of Monsignor Mario Salvatore Ricca as prelate for the bank, formally known as the Institute for Works of Religion (IOR), a Vatican statement said.
The prelate reports to the commission of cardinals that oversees the bank, attends board meetings and has privileged access to its famously secret financial activities. The job had been vacant since 2011.
Shortly before resigning, Pope Benedict named Ernst von Freyberg, a German lawyer, to be IOR's new chairman, replacing Ettore Gotti Tedeschi, who was ousted eight months earlier for allegedly neglecting his duties.
Von Freyberg said in May he was making checks on the IOR's 19,000 accounts, mostly held by Vatican employees, charities, priests and nuns.
The 57-year-old Ricca is a member of the Holy See's diplomatic corps and currently runs a number of church-owned residences, including the hotel where Francis has been living since he refused to move into the more opulent papal quarters in the Vatican palace.
Though it was IOR's oversight committee of cardinals, headed by Vatican Secretary of State Tarcisio Bertone, that officially nominated Ricca, the Vatican announcement made clear that Francis had personally backed the appointment.
The IOR is seeking recognition from the European anti-money laundering committee, Moneyval, that it is fully compliant with international standards on fighting terrorism financing, money laundering and tax evasion.
In July, Moneyval said the IOR still had work to do. Last year, the Vatican detected six possible attempts to use the Holy See to launder money. At least seven have been detected so far this year.
The bank has been dogged by scandal for decades, most notably 31 years ago when it was enmeshed in the bankruptcy of Banco Ambrosiano, then Italy's biggest private bank.
Banco Ambrosiano's chairman, Roberto Calvi, was found hanging from London's Blackfriars Bridge in June 1982. Though initially ruled a suicide by British investigators, an Italian court subsequently ruled that he was murdered. No one has ever been convicted of the crime.
With 114 employees, the IOR had $7.1 billion of assets under management last year, and a profit of 86.6 million euros ($115.52 million), which is used to support Catholic activities around the world. It does not lend money.
(Editing by Raissa Kasolowsky)