The Vatican bank, known as the Institute for Works of Religion (IOR), has been anything but for Works of Religion. With a long history of scandal, including numbered accounts for prominent politicians, stock manipulation, connections to the mafia, shady dealings and money laundering, the Vatican bank has been under scrutiny by the Italian authorities as well as Moneyval, the agency charged with determining which banks have the appropriate checks in place to prevent money laundering and terrorism financing.
Now under the shadow of St. Peter’s Basilica, the IOR is closing nearly 1000 accounts that are clearly not supposed to exist and appear to be suspicious.
“I am convinced that we are a well-managed, clean financial institution,” said Ernst von Freyberg, its newly minted president, appointed by Pope Benedict XVI. “I thought I would primarily have to do what is generally known as a cleanup,” Freyberg added, “but I haven’t, as yet, discovered anything amiss.”
But he and other executives had to quickly change their minds when auditors harshly criticized the managers. By the time an independent auditing group that specializes in tracing irregularities like corruption and money laundering combed through 30,000 accounts, Freyberg had to admit “that a large number of individuals—who actually shouldn’t even be allowed to have accounts at the Vatican Bank—highly appreciate its discreet business practices.”
Pope Francis is trying to clean up the bank’s image by changing its strategy and moving away from its absolute discretion, secrecy and protection from criminal prosecution, “toward more integrity and transparency.”
There is no tax in the Vatican state, so these accounts have all been protected from taxation. In fact, it is hardly any different than other tax havens, like the Cayman Islands, for instance. “In essence, the Vatican Bank has become an offshore paradise on the shores of the Tiber.”
In the approximately 1000 accounts that have been identified as suspicious, insiders have said that over €300 million ($407 million) was still on these accounts this past summer. “Most of this appears to be illicit earnings. Now those customers will have to transfer their money somewhere else.”
But these problems are only the surface. Church dignitaries are also known for making “astonishing transactions” in their own accounts. Recent discovery of misconduct has made it clear that even some church leaders are brazen in their attempts to assist with shady deals.
In other words, by cleaning up certain aspects of the IOR, there are still many ways in which clergy can handle money of less than transparent origins, for less than acceptable purposes, such as money laundering.
Don’t expect that the changes taking place will actually clean up the bank. The Bible says that the church-state (woman) has “a golden cup in her hand full of abominations and filthiness of her fornication…” Revelation 17:4. That “golden cup” suggests wealth and money. No matter how much Pope Francis may try to reform the bank, the scandals won’t come to an end. They may go “underground,” but the Bible declares the true condition of the church.