Suspicious financial reports down in Vatican, watchdog finds
An annual report from ASIF listed 80 Suspicious Activity Reports from 2024
The Vatican’s financial watchdog published its annual report April 9, boasting a drop in reports of suspicious financial activity and a consistent number of referrals to prosecutors.
The Financial Supervisory and Information Authority, formerly known as the Financial Information Authority, painted a broadly positive picture of its work to combat money laundering and financial crimes in the Vatican, citing solid internal governance at the sole financial institution under its supervision, the Institute for Work of Religion.
“The Financial Intelligence Unit reported a decrease in the number of Suspicious Activity Reports received” in 2024, according to the report.
“This trend appears to be mainly attributable to the progressive refinement of the selection process for cases to be reported,” the watchdog said, effectively crediting the drop in the number of reports to a better understanding of reporting criteria among IOR officers, while still finding the same number of suspicious transactions meriting investigation.
“In fact, despite the decline in the number of SARs received, the number of Reports transmitted to the Office of the Promoter of Justice by the Supervisory and Financial Intelligence Authority remained stable at 11” for last year, according to the report. While all 11 resulted in investigations being opened, there were no indictments during 2024.
The ASIF recorded five instances in 2024 which required the “use of preventive measures,” four of which involved attempts to do business with the IOR.
“Specifically, three measures were adopted to suspend transfer transactions, for a total amount of €1,058,130.00 and two to freeze accounts held with the IOR. These preventive measures were taken following suspicious transaction reports sent by the IOR.”
In total, 80 suspicious activity reports were flagged to the ASIF last year, of which 74 came from the IOR and six were made by authorities of either the Holy See or the governariat of the Vatican City State.
Many of the reports involved attempted transactions linked to an international list of high-risk jurisdictions and jurisdictions placed under increased monitoring by international authorities, often because they are zones of conflict.
Other “anomalies” which resulted in a transaction being flagged included unusually large cash transactions (found in more than a quarter of the reports), transactions deemed to be “inconsistent with the client’s status or past transactions,” “illogical or unnecessarily complex operation” in the transactions, and “negative press reports concerning the customer.”
According to the ASIF, transactions “inconsistent with the client’s status” and negative media reports concerning the client resulted in the most referrals to prosecutors for further investigation.
ASIF also recorded 129 incoming cross-border cash declarations, amounting to more than €18 million, and outgoing declarations totalling €5.2 million.
The influx of off-shore cash is a rise from last year, and in line with a year-on-year “trend in place since 2019, while the total amount of outgoing declared amounts has been relatively stable since 2021,” the report said. “The vast majority of the incoming declarations are attributable to the activities of public authorities and Vatican legal entities.”
While ASIF has a wider watching brief for anti-money laundering work in and through Vatican bodies, the only financial institution under its direct supervision remains the IOR, which, after several high-profile scandals around ASIF, is broadly seen as the most credible actor in the fight against financial corruption.
Both the former president and director of ASIF were defendants in the landmark Vatican City financial crimes trial which concluded in 2023. Both were acquitted of abuse of office charges but found guilty of criminal offences for failure to report a suspicious transaction to the Vatican’s Office of the Promoter of Justice.
It emerged first in the media and later in court that it was the IOR president, Jean-Baptiste De Franssu, and director Gianfranco Mammi, who flagged the infamous London property deal as suspicious in the first place, triggering the investigation which led to the current financial crimes trial.
In the process, the trial has heard, the men were subjected to coercion, threats, and retaliatory actions by senior Secretariat of State officials.
The IOR president, Jean-Baptise De Franssu also testified that ASIF’s leadership — René Brülhart, who served as president of ASIF until November 2019, and the agency’s former director Tomasso Di Ruzza — both pressured him to approve a 150 million euro loan to refinance the London deal, and offered him “protection” when he pointed out doing so would violate Vatican financial laws.
It has separately emerged that Brülhart had a side contract with the Secretariat of State as an investment advisor, meaning he was tied to financial deals his department was meant to exercise vigilance over.
Is it possible to get some data from similar sized commercial banks? How many suspicious transactions or frozen accounts are typical? How many investigations would a bank go through normally?
One would hope the Vatican banks would have no fraud, so I want 0 investigations. Unless these are precautionary and find nothing to be concerned about.
Glad to see that the Pillar has sources within the Vatican so we can read their unbiased reports on Vatican news.
A drop in the number of Suspicious Activity Reports (SARs) is not necessarily a good thing. Some organizations will deliberately lower their standards so that fewer transactions are flagged, thus reducing the number of SARs generated. Fewer SARs means less time and money will be spent on investigations, and the dirty money will continue to flow through the financial system.
Establishing SAR standards and their monitoring/tracking is a complex process. Financial Organizations tend to generate a lot of SARs, so the ratio of SARs to verified financial irregularities is very high, resulting in a lot of false positives.
Now I would never mean to impugn the fine record of Vatican Financial Management {sarcasm off}, as I certainly hope they are cleaning up their operations. The Pillar story quotes their Financial Intelligence Unit as attributing the drop in SARs due to ".....progressive refinement of the selection process for cases to be reported". We should certainly hope they are right, as international regulatory agencies and other governments will take notice and clamp down if this is not true.