Vatican bank rebuts 'impossible' Russian money claims

The Institute for Works of Religion rejected claims it had ties to Russia made by an advisor to the Ukrainian president

Vatican City’s commercial bank denied Saturday that it holds deposits and lends money to the Russian state. The charge was leveled by a senior advisor to Ukrainian president Volodymyr Zelensky, who accused the Vatican’s Bank of harboring Russian funds, despite international sanctions.

The Institute for Works of Religion “does not receive or invest Russian money,” the bank said in a Sept. 9 statement, after Mychajlo Podoljak, a senior advisor to the Ukrainian president, alleged in a television interview that Russian money was influencing Pope Francis’ attempts to broker peace after the 2022 Russian invasion of Ukraine.

IOR ATM machine in Vatican City. Pillar image.

Podoljak made the allegations in a Sept. 8 interview with the Ukrainian news broadcaster Kanal 24.

In the same interview, Podoljak criticized Pope Francis’ peace efforts, and said that the pope’s statements and gestures about the war have been perceived as sympathetic to Russia.

In May, Pope Francis said that he had been working on a secret plan for peace between Ukraine and Russia, though representatives from both governments denied any knowledge of the plan. Francis subsequently appointed Cardinal Matteo Zuppi as his personal peace envoy, and dispatched him to visit Ukraine.

Since then, Francis has attracted criticism from Ukrainian leaders, including the country’s bishops, for public statements which, they said, fail to properly recognize Russia’s role as the invader in the conflict, despite the pope repeatedly offering prayers for the country and describing it as being “martyred.”

The pope “has no mediation role, he is pro-Russian, he is not credible,” Podoljak told Kanal 24, adding his belief that "the investments that Russia is making in the Vatican Bank" steered papal diplomatic efforts.

“Russia has a large investment in the Vatican Bank, and this probably influences the pope's position,” Podoljak lamented, adding that “the Vatican has not condemned Russian aggression.” 

In response, the IOR said Saturday that the bank “strongly rejects [Podoljak's] allegations that the IOR would be investing Russian money.” 

“In addition to not corresponding to the truth, such an activity would also be impossible, considering the stringent policies of the IOR, and the international sanctions which apply to the financial sector.”

“The IOR does not receive or invest Russian money,” the bank said. “Statements made to the contrary in the press are based on nothing and should therefore be considered as such.”

The Institute for Works of Religion, the only commercial financial institution in the Vatican, operates as a for-profit institution providing banking and asset management services to private clients. But, as its name suggests, religious orders form the majority of the bank’s customer base, owning nearly half of its assets on deposit. 

The IOR also provides banking services to bishops’ conferences, dioceses and parishes in parts of the world without access to reliable local banking services. It also offers accounts to Vatican departments, institutions, and employees, as well as Vatican City residents.

On Saturday, the bank said that as a matter of basic policy it “does not accept, as clients, institutions or natural persons which do not have a close relationship with the Holy See and the Catholic Church.”

Furthermore, the bank said, international financial sanctions leveled against Russia following the 2022 invasion would make taking Russian deposits or investment business illegal.

“The IOR is a supervised financial intermediary, operating through international correspondent banks of the highest level and impeccable reputation required to comply with international standards,” the bank said in its statement.

Because the Vatican City state does not have personal taxation, IOR accounts have long been a target for money launderers or individuals hoping to use it as a tax haven, and the bank has previously been at the center of several financial scandals in its history, most notably the Banco Ambrosiano scandal of the 1980s. 

However, recent international inspections have given the bank a clean bill of health. 

The IOR is the only Vatican financial institution currently subject to oversight by Moneyval, the Council of Europe’s anti-money laundering agency. The European group last issued a report on the financial health of the Vatican and the IOR in June of 2021, following a lengthy onsite inspection the previous October.

That report concluded that, after years of internal policy reform and a change in leadership, the risk of external money laundering at the IOR was “medium-low.” 

“With regard to preventative measures, MONEYVAL underlines that the sole authorized institution [the IOR] has a sound understanding of its money laundering and financing of terrorism risks,” the watchdog reported. 

“In general, customer due diligence (CDD) and record-keeping obligations have been applied diligently and there is a rigorous risk-based transaction monitoring programme that requires the collection of information and documentation as necessary throughout the course of a business relationship.”