Vatican City Banking
Vatican City or
Vatican City State, in Italian officially Stato della Città del Vaticano
which translates as State of the Vatican City, is a landlocked sovereign
city-state whose territory consists of a walled enclave within the city
of Rome, Italy. It has an area of approximately 44 hectares (110 acres),
and a population of just over 800.
Vatican City was established in 1929 by the Lateran Treaty, signed by
Cardinal Secretary of State Pietro Gasparri, on behalf of the Holy See
and by Prime Minister Benito Mussolini on behalf of the Kingdom of Italy.
Vatican City State is distinct from the Holy See, which dates back to
early Christianity and is the main episcopal see of 1.2 billion Latin
and Eastern Catholic adherents around the globe. Ordinances of Vatican
City are published in Italian; official documents of the Holy See are
issued mainly in Latin. The two entities even have distinct passports:
the Holy See, not being a country, issues only diplomatic and service
passports; Vatican City State issues normal passports. Very few
passports are issued by either authority.
Banks in Vatican City
The Institute for Works of
Religion (Italian: Istituto per le Opere di Religione –
IOR), commonly known as the Vatican Bank, is a privately
held institute located inside Vatican City run by a
professional bank CEO who reports directly to a committee of
cardinals, and ultimately to the Pope (or the Camerlengo of
the Holy Roman Church during a sede vacante). Since its
assets are not considered property of the Holy See, it is
not overseen by the Prefecture for the Economic Affairs of
the Holy See, and it is listed in the Annuario Pontificio
together with foundations such as the John Paul II
Foundation for the Sahel, which provides funds for training
people to fight drought and desertification in nine African
countries. The current President is Ettore Gotti Tedeschi.
The Institute was involved in a major political and
financial scandal in the 1980s, concerning the 1982 $3.5
billion collapse of Banco Ambrosiano, of which it was a
major shareholder. The head of IOR from 1971 to 1989,
Archbishop Paul Marcinkus, was under consideration for
indictment in 1982 in Italy as an accessory of the
bankruptcy; however, he was never brought to trial due to
the Italian courts' ruling that the priest, being a high-ranking
prelate of the Vatican, had diplomatic immunity from
The Bank Identifier Code of the Institute for Works of
Religion is IOPRVAVX.
Banco Ambrosiano scandal
The Institute for Works of Religion was Banco Ambrosiano's
main share-holder. Archbishop Paul Marcinkus, head of the
IOR from 1971 to 1989, was indicted in Italy in 1982 as an
accessory in the $3.5 billion collapse of Banco Ambrosiano,
one of the major post-war financial scandals. Banco
Ambrosiano was accused of laundering drug money for the
Sicilian Mafia, led by Filippo Barbagli, which used
Propaganda Due ("P2"), a mobbed up Masonic lodge, as an
intermediary. P2 and its Worshipful Master, Licio Gelli,
were also involved in financing right wing terror groups
during the 1970s. As for Archbishop Marcinkus, he would
never come to trial in Italy, where courts ruled that he
possessed diplomatic immunity. He lived in retirement in Sun
City, Arizona (US) until his death on February 21, 2006.
The Institute for Works of Religion has denied having legal
responsibility for the Ambrosiano's downfall but did
acknowledge "moral involvement", and paid $241m (£169m) to
creditors. As of 2006, investigations are continuing
concerning the murder of Ambrosiano's chairman, Roberto
Calvi, which, according to Ernest Backes, former #3 of
Clearstream, may have been linked to the death of Gérard
Soisson, who used to work for Clearstream, a "bank of banks"
which practices financial clearing. According to recent
wiretap information, however, Calvi's death
was almost certainly decreed by the Cupola, the ruling
council of the Sicilian Mafia, which had come to view Calvi
as a liability since the bank's collapse.
money laundering investigationIn 2009, the Italian
magazine Panorama reported that Vatican Bank was being
investigated by Italian authorities from the Financial
Intelligence Unit of the Banca d'Italia and the Guardia
di Finanza over money laundering transactions worth €180
million (US$ 218 million) through a branch of UniCredit
located at Via della Conciliazione across from St.
Peter's Basilica. The bank handles accounts of the
religious orders and other Catholic associations using
the "offshore" (i.e., foreign) status of the Holy See.
On 21 September 2010, Italian police declared that Gotti
Tedeschi and another IOR manager were under
investigation for money laundering charges. €23 million
were seized as a precaution. Police began an
investigation regarding Tedeschi around a week before
the news was made public after a division of the Bank of
Italy alerted police to two transactions involving the
Vatican Bank that were deemed suspicious. The money
seized was bound from an Italian bank, Credito
Artigianato, to JP Morgan Chase and another Italian bank,
Banca del Fucino. Both the origin and destination of
the funds were accounts under the control of the Vatican
Bank. The Vatican Bank had allegedly failed to
disclose the origin of the money, a violation of Italian
In a statement regarding the investigation, the Vatican
said that it was "...perplexed and astonished by the
initiatives of the Rome prosecutors, considering the
data necessary is already available at the Bank of Italy."
According to the police, the presence of the
investigation did not mean either of the officials
involved had been charged with a crime, and a judicial
ruling would be necessary to continue the investigation.
Contrary to the Holy See's statements, IOR president
Ettori Gotti Tedeschi and IOR Director General, Paolo
Cipriani, were indicted for money laundering.
On Thursday, December 30, 2010, the Catholic News
Service homepage reported that Pope Benedict XVI had
issued an Apostolic Letter that established the
Financial Information Authority as an independent agency
to oversee the monetary and commercial activities of all
Vatican-related institutions, including the Vatican bank.
It will monitor all Vatican financial operations and
make sure they meet international norms against money-laundering
and the financing of terrorism
Economy: The unique,
noncommercial economy of Vatican City is supported financially by
contributions (known as Peter's Pence) from Roman Catholics throughout
the world, the sale of postage stamps and tourist mementos, fees for
admission to museums, and the sale of publications.
The Vatican also conducts worldwide financial activities, the Istituto
per le Opere di Religione (also known with the acronym IOR and wrongly
known as the Vatican Bank). This Institute has an ATM with instructions
in Latin, possibly the only such ATM in the world.
A souvenir shop on the roof of St. Peter's BasilicaThe Vatican has often
been accused by critics of being excessively wealthy, as in Avro
Manhattan's The Vatican Billions. However, the papal state has
previously run budget deficits and obtains much of its money from
international donations such as Peter's Pence.