Italy, Vatican make financial pact, as Holy See cleans house

AP News
Posted: Apr 01, 2015 10:16 AM

ROME (AP) — Italy and the Holy See signed an accord Wednesday to cooperate on fiscal matters, as the Vatican works to improve transparency after a string of financial scandals.

Italy's finance ministry said "full cooperation" between Italy and the Holy See was now possible thanks to reforms begun by the Vatican in 2010. It noted that Italy was the first state with which the Vatican signed such a convention, embracing "the most updated international standard" for exchange of financial information.

Monsignor Paul Gallagher, the Vatican's foreign minister, said the agreement "makes a significant step by the Holy See toward the aim of maximum transparency in the field of financial relations." He noted that, with the accord, the Vatican won't be able to invoke secrecy whenever Italy seeks financial information, similar to agreements signed recently by Rome with states long considered tax havens, like Switzerland, Liechtenstein and the principality of Monaco.

Significantly for the Holy See's coffers, Vatican-owned property outside the tiny Vatican City State's borders and situated in Italy will continue to be exempt from Italian property tax.

Pope Francis is overhauling Vatican power structures to combat corruption and other financial ills.

The opaque, secretive way the Vatican bank, formally called the Institute for Religious Works, had long been run was largely blamed for scandals. In 2010, Italian authorities seized 23 million euros (then $31 million) during a money-laundering probe after suspicion about a transaction involving a Vatican bank account at an Italian bank. The money was later ordered released after Italian authorities determined that the Vatican had devised suitable anti-laundering measures.

The Vatican bank also proceeded to close accounts that didn't meet tighter regulatory standards.