His reform is something more similar to Gregory VII. That of Gregorian reform is an heroic enterprise, brought on by a few man that works to re-moralized their society and so purify the Church. People gathered around Ildebrando of Soana begins a movement whose effect were so vast that a whole world change. Will this happen with the Benedict XVI’s Papacy?

Elected Pope with the name of Gregory VII, Ildebrando do not only care about the purification and moralization of the Church. He also collect the ancient sources, so creating a corpus of papers that will be the first global law of the world, the Canon Law. More, he defends the autonomy of the Church. In Dictatus Papae, Gregory VII affirms the supremacy of the Pope on any other power, the imperial one included. Then, he organizes the Pontifical Legates network. He establishes two kind of Pontifical Legates: the one in loco, charged by the Pope to look after the application of Gregorian reform on a territory; and the one sent by  Rome to accomplish mission in a foreign countries. The defense of the autonomy and sovereignty of the Church is also brought on, during the Gregorian Age, by creating new canonic collection. Gregory VII auspicates the research of the sources of the law, and so many researchers look for documents that affirms that the Papal authority is the source of the law. This research will bring to light the writings of Attone, Anselm from Lucca, Deusdedit.

It is the work Benedict XVI is doing as well. Joseph Ratzinger began his theological research with his Doctoral thesis on the «People of God and House of God in Saint Augustine’s Doctrine of the Church» – defended in 1951 -, and he has always been aware that he needed to look back to the Church, and then he understood that the Church needed to be less worldy, and that being less wordly means to change and unify. Finally, the Canon Law is the tool that the Church has to do it.

Benedict XVI wants to focus on Canon Law, and this is one of the reasons why the Secretary of State is a Canonist and the last Papal nuncios appointed is Charles J. Brown, a non diplomat that served for years in the Congregation for the Doctrine of the Faith. This comeback of the Canon Law is driving the Benedict XVI’s choice for what concern international relations, and even for what concern its commitment for financial transparency. This led to a renewed Vatican anti-money laundering law. Not everybody had been happy about it, inside and outside the Vatican Walls. Why?

The new text of anti-money laundering Vatican Law come into effect

There had been no modification to the Decree n. 159 issued by the Pontifical Commission for Vatican City State. The last 25th of January, Holy See issued the decree n. 159 to amend the Vatican City State Law n. 127 concerning the countering of money laundering and financing of terrorism. As the art. 7 of the Fundamental Law of Vatican City State, the President of the Pontifical Commission for Vatican City State  «in cases of urgent necessity, he can issue dispositions having the force of law, which  however lose their force if they are not confirmed by the Commission within ninety days». The Commission confirmed the decree and – beyond whatever it has been written and told during these last three months – there were no doubts about it.

Anti money-laundering Vatican law: a never ending debate

Ever since the Law n. 127 had been issued, the Governatorate knew that this law had been written in a hurry, under the pressure of the investigation of the Public Prosecutor of Rome on two money transfer ordered by the I.O.R. (the Institute for Religious Works), and with the necessity to fully comply to the norms required by the European Union in the Monetary Convention signed by the Holy See in 2009. Yet while Holy See and European Union were discussing the terms of the Monetary Convention, the then number two of Vatican City State Carlo Maria Viganò showed himself doubtful about what the on-going discussion was going to ask to the Holy See, and proposed to unhook the Holy See by Euro area, in order to preserve its sovereignty.

The law n. 127 reassured Italian prosecutors, but on the other hand it did not completely fit to the international standards. The decree was an improvement of the law promoted by the Vatican City State administration in order to fit to international standards and at the same time to let them adhere to a peculiar State that is Vatican City State, while preserving the Holy See sovereignty.

An Italian problem?

Yet, during these last three months, Italian medias highlighted several rumors coming from «inside the Vatican» against the improvement of the law 127. Il Fatto Quotidiano – one of the most prominent and aggressive Italian newspaper – published a series of leaks of reserved documents. Among these documents, there was also an e-mail sent by the Director of the Authority for Financial Information Francesco De Pasquale (the controller) to the president of the Council of Superintendency of the I.O.R. (the controlled). This documents proved a questionable relationship between two parts of the mechanism of control of the Holy See, and at the same time proved that an animated debate took place within the Sacred Walls about the improvement of the Vatican Law n. 127.

It had been also leaked to Il Fatto Quotidiano a notation by cardinal Attilio Nicora, president of the Authority for Financial Information (but also member of the Council of Superintendecy of the I.O.R., member of the Commission for the Governatorate of Vatican City State and member of the so-called Council of 15, the assembly of 15 cardinals that periodically meet to take stock of the Vatican financial situation). In this notation, Nicora described the amendments to the Law n. 127 as “step behind” confronting with the previous text, which he blessed and promoted. More. The last March, the 19th, an article published on Il Corriere della Sera, the most spread Italian newspaper, let understand that Nicora himself was working to rewrite the text of the decree n.159, in order to bring the law back to the “old” law n. 127. The article proved that – inside the Vatican – the debate never ended.

Why the anti-money laundering law changed

The amendments to the Law n.127 had been requested by the advisors of MONEYVAL, the body of the Council of Europe that analyze and judge the adherence of the States to the 40+9 GAFI recommendations for contrasting money laundering and financing of terrorism. Marcello Condemi, a member of the Vatican Authority for Financial Information and draftsman of the first sketch of the old law n. 127, worked on a second sketch of the law right after the first on site visit of the MONEYVAL advisors in Vatican, that took place in November 2011. Several debates within the Sacred Walls followed. Finally, with the decree n. 159, the law n. 127 had been essentially modified. The “new” law n. 127 is now more adherent to international standard. It strengthens the power of controlling of the Authority for Financial Information, but at the same time distributed the controlling powers on several bodies of the Holy See, according to the principle of the separation of powers (even the Gendarm Corps is now encouraged to strengthen its intelligence in order to take part to the countering of money laundering with proper tools of investigation).  It gave to the Vatican Secreteriat of State the complete management of the relationships between States – «The Secretariat of State – it is written in the decree n. 159, art. 2 quinquies – foster the adhesion of the Holy See to treaties and international agreements, as well as the relations and the participation of the Holy See to institution and international organization qualified to define norms and good practices for what concerns the prevention and countering of money laundering and financing of terrorism».

That the effort of the Holy See had been to adhere to international standards for what concerns the countering of money laundering without denaturalize its own institution is evident when – in the decree n. 159 – the procedures to take into consideration the list of terror organizations issued by the Security Council of United Nations. According to the law n. 127, Holy See does not mechanically transpose the United Nations Lists. This choice is aimed to preserve the Holy See and Vatican neutrality. In fact, lists are written under the «Chapter 7» of Charter of the United Nations, and that Chapter is applied in war time. Holy See could be embarrassed by a mechanical transposition of the lists, since it could be in contradiction with the Holy See orientation –  Holy See is traditionally neutral and in favor of peace. Since Holy See is a Permanent Observer to the Assembly of United Nations, and not a Full Member, a settlement has been made to the autonomy of the Holy See: the Vatican Secretariat of State – according to the new article 24 of the law n. 127– will draw up its own list of terror organizations that will be based on the one issued by the United Nations, so keeping its autonomy, and at the same time showing to be sensitive to the international security goals. Holy See so maintain its autonomy, but at the same time proves sensibility to the international security goal .

Is there a biggest target?

Maybe there is a biggest target on the basis of the polemics that followed the one the another from the moment in which the Holy See began the process enrolled in the «White List», the list of states most active in preventing and fighting the financial crimes.. The critics to the lack of transparency of Vatican finance would hide a sort of attack to the sovereignty of the Holy See itself. Documents leaked by the press – the so-called Vatileaks, that are now under the investigation of a commission made up of the cardinals Herranz, De Giorgi and Tomko – prove that the «sovereignty issue» has never been taken into consideration by the «step behind» theorists. The leaks are about the retroactivity of the «new» law n. 127; about the will to cooperate with Italian investigators; about a diligence toward Italian authorities that led Ettore Gotti Tedeschi to be voluntarily questioned by the Italian magistrates without these latter submitted the request internationally.

Yet, Paolo Cipriani, General Director of the Institute for Religious Works, explained – during one of the seminars periodically held by the I.O:R. to train the administrators of the Congregation with deposits in the «Vatican bank» – that the Institute has always responded to any request submitted by Prosecutors or Central Banks. The responses by the Holy See, Cipriani explained, had come formally – there had been during the last ten years 20 requests submitted internationally to the Holy See (it is a global data, it does not concerns the only I.O.R.): 19 had been fulfilled by the Vatican City State, the last one has been judged by a Vatican Court – and not formally, for a sort of «good neighborhood relationships» with the other financial institutes. Holy See – Cipriani also underlined – did not answer in the only case the request would be considered a vulnus to its sovereignty.

A wider – international – perspective

It is now time to see things from a wider perspective. The announcement of the improvement of the law n. 127 has been launch in the Osservatore Romano, the newspaper of the Holy See, in an article by msgr. Dominique Mamberti, the «foreign minister» of the Holy See. Mamberti linked the news of the improvement of the law n. 127 to the ratification by the Holy See of three international threaties – the news about the ratification had been given the 25th of January as well. Holy See adhered to and ratified the International Convention for the Suppression of the financing of terrorism(Onu, New York, 1999) and the United Nations Conventions against the transnational organized crime (Palermo, 2000). Holy See also announced the ratification of the United Nations Convention against illicit traffic in narcotics drugs and psychotropic substances (Wien, 1998): this latter Convention had been already signed by the Holy See when it had been adopted by United Nations.

It’s a long time that the campaigns to expell Holy See by the concert of Nations – as the See Change campaign – broke down in the public opinion. In 2007, The Economist – one of the most authoritative magazines in the world – published an article headlined “God’s ambassadors” about the Vatican diplomacy. The article ended with this advice for the Holy See: «It could renounce its special diplomatic status and call itself what it is – the biggest non-governmental organization in the world».

Within the bureaus of the United Nations and of the other major international organization in which the Holy See seats as an observer, the idea to expel Holy See from the concert of nations is widely spreads. Even if this idea did not succed, and – on the other hand – on July 2004 the General Assembly of United Nations approved a resolution that not only confirm, but even enhanced the presence of the Holy See within the United Nations.

So, a more subtle strategy began. This strategy – brought on in international environments – aims to undermine the moral power of the Catholic Church and of religions in general. It consists in remarking that religious freedom is something like the freedom of expression, or in confusing the religious freedom with the freedom of worship. Vatican diplomacy is undermined, too. If Italian Prime Minister Mario Monti caused an «earthquake» at the Italian Ministry for Foreign Affair by showing his intention to appoint ambassadors not raised up with a diplomatic career, Vatican insiders refer about the intention to appoint lay people as diplomatic representative of the Holy See. Pontifical Legates must be bishops, since they represent the Pope. This rule is valid and effective only for Papal nuncios: they work as Papal ambassadors, they keep relationships with the governments, and at the same time they work as bishops, speaking to the Episcopal Conferences of the countries they are appointed at, give their opinion about the to-be-appointed bishops.

Nuncios that are appointed as permanent observer within the International organizations (United Nations, U.N.E.S.C.O., F.A.O., European Parliament) must only care the relationships between the Holy See and the governments. This would open to the appointment of lay people as permanent observers of the Holy See.

Could this be the beginning of a weakening of the Vatican diplomacy? In the book C’era una volta un Vaticano (Once upon a time a Vatican), Massimo Franco, underlines this lack of international appeal of the Holy See. Too appeased on Italy and on its relations with Italy – Massimo Franco writes .- the Holy See lost sight of its wide global horizon that made of it the most long-lived and solid institution in the world. Canon right is the first really global and globalized law of the history, and it still consists in a solidity that no friendly diplomatic relations would touch.

This same problem spoiled the path to the Vatican financial transparency. Holy See borders are not anymore with Italy, but with the whole Europe. Yet, the members of the Authority for Financial Information are all Italian, coming from the Bank of Italy milieau – even if the Bank of Italy proved a certain hostility toward the Holy See (the investigation of the Roman prosecutors undermined the Holy See sovereignty, since prosecutors asked for information to the Financial Intelligence Unit of the Bank of Italy – which should be independent – instead of investigating with the Guardia di Finanza).

The “old” law n. 127 would have probably solved the “judicial” problems with Italy, but certainly it would also set back – if not avoided – the Holy See path to the white list. The Plenary Assembly of MONEYVAL will meet the next July, and on that occasion the report about Holy See will be issued. It will not be at that moment that the Council of Europe will decide about the enlistment – or the not enlistment – of the Holy See among the virtuous States. But probably, the possibility to be part of the white list would have been more difficult without the improvement of the law n. 127, that the MONEYVAL advisors auspicated.

The two news are not directly linked, but they are both meaningful. And they show what is the direction the Holy See is heading to, thanks to the Benedict XVI’s «quiet revolution». And card. Bertone, Secretary of State, albeit in the midst of the storm, is bringing on Benedict XVI’s wills. Now it is the time for a more in depth analysis of the two «Vatican financial» news of the week.

The new regulation of the Prefecture for Economic Affairs

On March, the 9^th had come into effect the new regulation of the Prefecture for the Economic Affairs of the Holy See. The regulation had been published on February, the 22^nd and has been signed by the cardinal Tarcisio Bertone, Vatican Secretary of State. The regulation is – more than a little revolution – a way to keep pace with times and with the responsabilities of the Roman Curia, that is – it is written in the letter of presentation fo the new regulation by the prefect Giuseppe Versaldi – «one of the main instruments that the Holy Father has at his disposal» to act as a Pope.

Established by Paul VI in the 1967, the Prefecture for the Economic Affairs is entrusted with overseeing all the offices of the Holy See that manage finances, regardless of their degree of autonomy. It does not manage finances itself, but instead audits the balance sheets and budgets of the offices that do. It then prepares and publishes annually a general financial report. It must be consulted on all projects of major importance undertaken by the offices in question

It means that the Prefecture oversees all the dicasteries of the Roman Curia and of all the consolidate administrations, and the Vatican Radio, the Vatican Typography-L’Osservatore Romano publishing house, the Vatican Publishing House and the Vatican Tv Center. The Prefecture also oversees the balance sheets of Vatican City State.

In 34 articles, the text outlines the amplification of the competences of the Prefecture, that is the body «responsible for the economic address and program, as well as it is responsible to the vigilance and the control of the administrations of the Holy See». The change is considerable. Just take a look to the previous regulation – delivered November, 20^th 1999, where only «surveillance and control» were mentioned. So, the Prefecture can be now roughly compared to a Ministry of the Economy. The Prefecture – art. 2 of the new regulation – «prepares the document of economic planning in which are outlined all targets» that the administrations of the Holy See must jointly achieve. More: the document «periodically proposes the main macro-economical parameters» the administrations should refer to for their financial forecasting.

Which are the functions of the Prefecture for Economical Affairs? It prepares the annual reports, it carries out extraordinary administration acts and obviously it controls the annual statements. In the article 5 of the new regulation it is also mentioned the promotion of the «cooperation among the dicasteries, even through meetings, to jointly study, examine and evaluate relevant facts of administrative and financial management». This article of the new regulation recall, in some ways, what card. Bertone, Vatican secretary of State, underlined during the last meeting with heads of Vatican departments (Prefectures and Pontifical Councils). Bertone asked more coordination among the several branches of the Vatican curia, and also pointed at the encroach of the «passion for the little news of ecclesiastical gossip, that undermine the Holy See prestige and sometimes crab the climate of confidence and trust among the Holy See’s bodies».

The commitment to surveillance also includes the «analysis, in order to assure a precise and critical acquisition and preservation of the document with juridical relevance referred to any board». During the Papal Vacant See, the Prefecture is kept to give the final balanced and consolidated of the current year to the Cardinal Chamberlain.

One more step toward financial transparency

«Within the framework of the active co-operation between the Holy See and MONEYVAL (the Department of the Council of Europe which deals with the evaluation of systems adopted by member States to counter money-laundering), meetings of a technical nature were held in the Vatican between 14 and 16 March 2012». This is the beginning of the official press communiqué delivered at the end of the second on-site visits to the Holy See of the advisors of the Council of Europe. These visits are not inspections.

MONEYVAL advisors got back to the Vatican after their visit of the last 21-26 November. After their first visit, the Vatican law against money laundering – i.e. the Vatican law n. 127 of 2010 – has been improved and essentially re-written. The new text of the law has been promulgated by the President of the Governatorate of the Vatican City State with a Decree on January, the 25^th. The most important news is that the Holy See, by conforming its anti money laundering law to the international standards – «The Vatican is heading in the right direction with the revised norms», Jeffrey Owens,  head of tax issues at the Organization for Economic Cooperation and Development, said – seems to show to strongly tread the path to be enlisted in the group of the «virtuous» countries for what concerns the prevention and countering of money laundering and financing of terrorism.

This path is followed step by step by MONEYVAL advisors. At the end of the first on site visit, they explained in an official communiqué delivered on the web site of the European Body that «at the conclusion of its mission, the MONEYVAL team  shared and discussed its initial findings with representatives of the Holy See, after which initial views were exchanged». These impressions also dealt with the old text of the law n. 127: MONEYVAL advisors had not such positive impressions of the law, since it seemed to concentrate the warranty of the integrity of «Vatican finance » to the only Authority for Financial Information, without showing the will to truly involve all the Authorities concerned. Perhaps it is not a case that one of the main innovations of the new text of the law n. 127 is about the Authorities involved in the struggle against the money laundering and the financing of terrorism –  beyond the Authority for Financial Information, now the text also mentions the Secretary of State, the Pontifical Commission for the Vatican City State, the Vatican Gendarmes Corps.

The trend seems to be in favor of an involvement of the whole Vatican institutional framework, and at the same time in favor of more attention paid to the peculiarities of the Holy See and of the Vatican City State, as MONEYVAL advisors suggested. This effort also merited the appreciation of MONEYVAL advisors. «The meetings – it is written in the press communiqué – had been planned earlier, taking into account both the specific nature of the Holy See and of Vatican City State and the fact that this was the first evaluation of their respective legal systems. The meetings made it possible to continue gathering information on the steps taken thus far in the process of complying with international standards in the area of preventing and countering money-laundering and the financing of terrorism, such as the adoption of the Decree No. CLIX of 25 January 2012, replacing Law No. CXXVII of 30 December 2010, as well as the ratification of and adhesion to certain international Conventions pertinent to the question».

The conventions which the communiqué refers to are the  adhesion and ratification to the International Convention for the Suppression of the financing of terrorism (Onu, New York, 1999) and the United Nations Conventions against the transnational organized crime (Palermo, 2000), and the ratification of the United Nations Convention against illicit traffic in narcotics drugs and psychotropic substances (Wien, 1998) –  this latter Convention already signed by the Holy See when it had been adopted by United Nations. It is highly meaningful that the adhesion and ratification to these Conventions had become official on January, the 25^th, the same day when the Decree of the President of Vatican Governatorate had been promulgated.

The path to the new law

In actuality, Vatican officials were already working to an improvement of the law n. 127, in full knowledge of the fact that the law had been written in hurry and under several pressures (among these pressures, two investigations promoted by the Rome Public Prosecutor: one about a money transfer from a IOR account deposited with a branch of UNICREDIT Bank in via della Conciliazione in Rome in 2009; and the seizure of 23 million euro transferred by the IOR from two accounts it had in Banca del Fucino and Credito Artigiano to another IOR account to a JpMorgan Bank branch in Frankfurt).  The same law n. 127 had to accomplish to the need to put into effect the Monetary Agreement between the Holy See and the European Union, signed in 2009.

It easy so easy to understand why the law n. 127 is important – even if some observers underlined that the law was particularly severe (especially for what concerned the introduction in the Vatican legislation of the auto-money laundering crime, while several legislation – Italian one included – does not contemplate this kind of crime). But there was also the need of a more in-depth reflection to accomplish the Vatican City State peculiarities, since in the Vatican there are no banks and no financial market.

Almost before the MONEYVAL advisors went to the Vatican for the first on site visits, the tops of the Holy See were thinking about how the Vatican could better adhere to the international standards. It was not only a technical problem, it was a problem to let the international standards in a peculiar reality as the Vatican is. This reflection brought to the improvement of the text of the law n. 127.

Who is against financial transparency?

Obviously, this brought to a lively debate within the Holy See officials. As the medias covered, among the opponents to the improvement of the law was the cardinal Nicora, president of the Authority for Financial Information. Nicora – as revealed by the Italian newspaper Il Fatto Quotidiano, that published a note written by card. Nicora – defined the new text of the law . 127 «a step behind» (this sentence had been highlighted several times in the commentaries about the so-called «Vatican finance»). In order to avoid a conflict of interests with the presidency of the Authority for Financial Information, Nicora resigned by the presidency of the APSA – the Administration for the Patrimony of the Apostolic See, a sort of «Central Bank» of the Holy See – but still holds his post within the Vigilance Commission of the Institute for Religious Works (which is under the surveillance of the Authority for Financial Information), within the Council of the Fifteen – a sort of “Little Parliament” made up by 15 cardinals that meet periodically to verify the correctness of “Vatican finance” – and also within the Pontifical Commission for the Vatican City State, that, according to the new text of the law n. 127, will be one of the actors that regulate the Authority for Financial Information.

According to the vaticanista Sandro Magister, even Ettore Gotti Tedeschi, president of the Council of Superintendency of the IOR, was against any intervention on the law n. 127. Gotti Tedeschi even feared the risk of an exam failure of the new text by MONEYVAL. Probably, Gotti Tedeschi – who still seats in the board of the Administration of the Cassa Depositi e prestiti – Loan & Deposit Saving, a public body controlled (with the 70 per cent of stocks) by the Italian Ministery of Economy, and this charge would in theory not tally with his Vatican charge as representative of a body of State – fears that his «image» of solver of the age-old Vatican financial obscurity could be delegitimized.  And this image is so important for him that – with an excess of diligence – he agreed to be questioned by the Italian magistrates, even if these latters did not submit the request internationally. Many commentators considered the Gotti Tedeschi’s one a «questionable decision», if not even damaging for the Holy see’s interests, since it could be read as a renounce to the immunity for the Central bodies of the Holy See.

Among the followers of the «step behind» -doctrine there was also the direction of the Authority of Financial Information. An e-mail of the director Francesco De Pasquale to Ettore Gotti Tedeschi had been leaked to the Italian newspaper Il Fatto Quotidiano. In the e-mail, De Pasquale unveil his adversity to the re-writing of the law n. 127. This e-mail also unveil an almost questionable relationship between the controller (De Pasquale) and the controlled (Gotti Tedeschi), also considering that the warranty of the integrity of «Vatican finance» had been depicted to reside in the Authority for Financial Information.

Waiting for July

MONEYVAL conclusions on the Holy See and  Vatican City State financial reliability will be delivered the next July at the plenary assembly of the body. This agenda has been agreed long time ago, and it never changed, as the official communiqué well let understand (one can there read that the meetings had been «planned earlier» and that the report «as scheduled» will be examined by the Plenary Assembly of MONEYVAL next July). There will be no eventual change of schedule for the drafting of the final report. One should not even be surprised by the comeback of the MONEYVAL advisors: all the European Countries had at least two, and sometimes even three rounds of evaluation, and this evaluations are about a long-time commitment of adherence to the international standards, and are not an exam about the financial transparency/not transparency to bring into an end within a few months.

Italian vision vs. European (and international) vision

The day after the MONEYVAL on site visit to the Vatican, the Italian newspaper Il Sole 24 Ore spread the news that a IOR account deposited with a branch of JpMorgan Bank in Milan had been closed because the IOR could not satisfy the requests of transparency. The article – very detailed, indeed – can be seen as a counterattack of the followers of the «Italian party». While the Holy See worked in order to accomplish the international standards of transparency, the propaganda on «Vatican obscure finance» rose up especially thanks to the investigations promoted by the Public Prosecutor of Rome and requested by the Unit for Financianl Information of the Bank of Italy. Is Italian State working to consider the Vatican something less than an enclave in the Italian territory? And did this interest toward the Vatican finance rise especially in Italy? And is the Authority for Financial Information itself a player that is playing is game in the field of Italy, and not in the field of the Holy See, that is working to strengthen its international appreciation and acknowledge?

Just take a look to the board of the Authority for Financial Service. Excepted Nicora, Dalla Torre and an internationalist jurist come from other charges within the Holy See, many members of the Authority for Financial Information – e.g. Francesco De Pasquale, Marcello Condemi – come from Italian banks and from the Bank of Italy, where they were not appointed in important charges. The composition of the board is not seen – by some insiders – coherent with the universality of the Holy See (whose employees are traditionally chose internationally) since the imbalance to Italy is considered a sign of weakness and source of risks, more than of opportunity, since the troubles of the Holy See came from a request of the Bank of Italy then headed by Mario Draghi (now president of the European Central Bank).

So, while Europe shows appreciation for the steps forward of the Holy See, on the Italian side the war of the «financial» leaks just began. The news of the closing of a IOR account is probably just a first signal.

There was not just law “n. 127 question”. In the last meeting with heads of Vatican departments (Prefectures and Pontifical Councils), Bertone asked more coordination among the several branches of the Vatican curia. He also pointed at the encroach of the «passion for the little news of ecclesiastical gossip, that undermine the Holy See prestige and sometimes crab the climate of confidence and trust among the Holy See’s bodies». The Pope presided the meeting, and he agreed with each word of his Secretary of State. In 2009 – in his letter to the bishops of Catholic Church concerning the remission of the excommunication of the four bishops consecrated by Archbishop Lefevbre – the Pope quoted this paragraph from Galatians 5:13-15: «Do not use your freedom as an opportunity for the flesh, but through love be servants of one another. For the whole law is fulfilled in one word: ‘You shall love your neighbour as yourself’. But if you bite and devour one another, take heed that you are not consumed by one another».

There has been some «bite and devour» against Bertone, too. Since he has been appointed as Secretary of State, the attacks against him had been continuous. Before Bertone turned 75, several influential cardinals had asked Pope Benedict to make a change in Secretariat of State, because of problems with curial government and the lack of coordination that had taken place. Now that he turned 77, many observers spread the voice that there should be a change of leadership in the control room of the Roman Curia.

Benedict XVI and Bertone are following the same footsteps. Step by step, they are changing the Vatican approach. Not casually, Benedict XVI wanted an expert of Canon Law as Secretary of State, and not a diplomat. This choice was not well taken by diplomats and his protégés, that increased their influence under the former Secretary of State, cardinal Angelo Sodano. But it is part of a long-sighted project of Benedict XVI. The Secretary of State must not necessarily come from the diplomatic service. His function is to «provide close assistance to the Supreme Pontiff in the exercise of his supreme office», and  this close assistance does not deal just with diplomatic relationships. For example – according to Pastor Bonus pastoral constitution – the Secretariat of State must «draw up and dispatch apostolic constitutions, decretal letters, apostolic letters, epistles, and other documents entrusted to it by the Supreme Pontiff».

An expert of Canon law –  and Bertone is – could better coordinate the drawing of documents. The Pope himself – in the 2010 letter to the Catholics of Ireland – wrote that  «the program of renewal proposed by the Second Vatican Council was sometimes misinterpreted and indeed, in the light of the profound social changes that were taking place, it was far from easy to know how best to implement it. In particular, there was a well-intentioned but misguided tendency to avoid penal approaches to canonically irregular situations». Turning back to the solidity of law, to remember Christian roots and to turn back to God. This seems to be the Benedict XVI’s plan for the universal Church, as the next Consistory would show.

So, attacking Bertone means attacking Benedict XVI. Was that a case, some insider questions, that the strongest attacks against Bertone leadership – the Viganò’s scandal and the consistory itself – came right when the Holy See was strengthening is international impact?  Who wants to undermine Holy See international impact? In fact, in those days Holy See rewrote its 2010 anti-money laundering law, the Vatican law n. 127. It is important to see what the new law really is about, going beyond the possible «bite and devour strategy». It was maybe to prevent that strategy that Holy See made no major announcement of the revision, while the Vatican’s foreign minister, Archbishop Dominique Mamberti, referred obliquely to it in an article Friday in the Vatican newspaper L’Osservatore Romano. This is probably also the reason why the law come into effect with an urgent decree, to be ratified by the Pontifical Commission of Vatican City State within 90 days.

The first point of the new Vatican law n. 127 is about financial transparency; the law acknowledges the right to privacy, and at the same time shed the obscurantist myth of Vatican secrecy. In fact, the Vatican law n. 127 aims to protect the right to privacy acknowledged in all the civil countries – the right to privacy is even mentioned in Gaudium et Spes, one of the Constitutions of the Second Vatican Council  – and at the same time it aims to favor the international exchange of financial information.

Why did the Vatican modify the law just one year after its introduction? In fact, the law n. 127 had been written in haste because of several reasons. One of this reasons was the need to solve the «IOR case», that is the seizure – ordered by Italian magistrates – of 23 million euro transferred by the IOR from an account it owned to the Credito Artigiano toward Jp Morgan (20 million) and Banca del Fucino (3 million). Another reason was the need to bring into effect the Monetary Convention with European Union signed in 2009.

It was not downhill to the Monetary Convention. Since February 2009, Vatican and European Commission advisors (Italy was part of the table as observer) start up the job to define the new monetary agreement. European Union conditions immediately seemed too restrictive. The relationship between Holy See and European Union were fraught. Vatican had the will to keep its autonomy, and Mons. Carlo Maria Viganò, then secretary of the Governatory of the State of Vatican City, even proposed to unhook Holy See from the Euro area, in order to let the Holy See avoid to be subjected to too restrictive conditions. Someone also proposed not to close the agreement within the year 2009, and to postpone the closure of the agreement to 2010. But time is short, and hierarchies of the Holy See did not take in consideration both of the hypothesis. The monetary agreement was finally signed on December, 17th 2009. Joaquin Almunia, Europen commissioner for Economical and Monetary Affairs, and mons. André Dupuy, Apostolic Nuncio to the European Union should sign together. But Almunia refuses to sign the agreement in the same room with the pontifical representant, and so Dupuy and Almunia sign the agreement each one in their own office.

Even inside the Vatican, things went on quickly. The Vatican Law n. 127 is adopted and it is decided to extend the effects of the new regulations to the Holy See via a motu proprio by Benedict XVI. The Motu Proprio is released the 30th of December 2010, right in time not to let the agreement lapse. According to some Vatican insiders, the institution of the Authority for Financial Information would mean that the same Ettore Gotti Tedeschi, president of the Commission of Vigilance of the I.O.R., is not given a blank cheque by the Pope, since the I.O.R. itself is subjected to monitoring. This is even truer for what concerns the new law: Jeffrey Lena, the Vatican’s U.S. attorney, noted for example that the new law allows for the IOR itself to be sanctioned up to €2 million if it violates the law — and it also allows for the IOR to have recourse to the Vatican’s court system to appeal.

Modifications of the law – promoted by the Vatican Secretariat of State and the Pontifical Commission of Vatican City State – seem to mean that the new law is not merely «a slap on the face» for some contingent problem. Holy See is going to meet the international standards, and it does not seem to be an occasional concurrency that the same day the implementation of law n. 127 came into effect with an urgent regulations, Holy See announced the ratification of three international agreements. Holy See adhered to and ratified the International Convention for the Suppression of the financing of terrorism (Onu, New York, 1999) and the United Nations Conventions against the transnational organized crime (Palermo, 2000). Holy See also announced the ratification of the United Nations Convention against illicit traffic in narcotics drugs and psychotropic substances (Wien, 1998): this latter Convention had been already signed by the Holy See when it had been adopted by United Nations.

It was January, 25th. During those days, medias highlighted Vigano’s scandal, depicting it in the terms that Vatican could be considered a multinational company whose seat is in Italy. Some days later, a confidential memo on IOR-Aif (Authority for Financial Information) relationships had been leaked to the press. This memo was equivocally a blight on the Vatican transparency toward Italian authorities.

Anyway, the IOR case emphasized almost an excess of diligence by Ettore Gotti Tedeschi, president of the Supervisory Commission of the IOR. Gotti Tedeschi agreed to be questioned by the Italian magistrates, even if these latters did not submit the request internationally. Many Vatican insiders considered the Gotti Tedeschi’s one a «questionable decision». It is because this decision seems to be a renounce to the immunity by Gotti Tedeschi, and this renounce to immunity could be eventually extended to the body of State he presides.

It is important to say that it is not only an Italian-Vatican matter. The improval of the Vatican law n. 127 bodes to a long-sighted choice. In fact, Jeffrey Owens, head of tax issues at the Organization for Economic Cooperation and Development which maintains the «white list» of the virtuous State in countering money laundering, said to Associated Press that the Vatican is heading in the right direction with the revised norms. «What I see in these developments – Owens said – is that the Vatican has recognized that in today’s financial environment there is a premium on transparency and that to achieve this, this must conform to the highest international standards, whether in the area of money laundering, tax evasion or bribery».

If the «old» law n. 127 had been written in haste, the «new» law shows that Holy See means business on contrasting money laundering. After just one year, Holy See changes his law as requested by  MONEYVAL Adivsors, come for an on-site visit in the Vatican the last November. The advisors noted inadequacies in the Vatican legislation. According to MONEYVAL official communiqué,  «at the conclusion of its mission, the MONEYVAL team  shared and discussed its initial findings with representatives of the Holy See, after which initial views were exchanged». Of these inadequacies, the Holy See was aware. The common references are the 40+9 GAFI recommendations – references that every country should follow.

There are substantial news. For example, the “old” law n. 127 gave the power to supervise and contrast the  money laundering to one only authority, the Authority for Financial Information – established via Motu Proprio by Benedict XVI in 2010. The “new” law fairly share the power among other authorities, that are the Vatican Secretariat of State, the Pontifical Commission of the Governatorate of Vatican City State, the Authority for Financial Information, and also the Vatican Gendarme Corps. This technicality confirms the long-sighted Vatican policy. Jurisdictions are called – coherently to the principle of rule of law – to involve all their institutions, thus competent authorities must follow the same rigour and transparency policy in order to prevent and countering money laundering and financing terrorism.

It is interesting to see that Holy See met the challenge to adequate to International standards without denaturalizing their institutions. In Vatican City State, in fact, there is no market and there are no banks. According to the Italian Supreme Court, IOR is «a central body of the Church», that is a governmental body that does not aim to distribute assets.

One example of the effort of the Holy See is the procedures to take into consideration the list of terror organizations issued by the Security Council of United Nations. According to the law n. 127, Holy See does not mechanically transpose the United Nations Lists. This choice is aimed to preserve the Holy See and Vatican neutrality. In fact, lists are written under the «Chapter 7» of Charter of the United Nations, and that Chapter is applied in war time. Holy See could be embarrassed by a mechanical transposition of the lists, since it could be in contradiction with the Holy See orientation –  Holy See is neutral and in favor of peace. Since Holy See is Permanent Observer to the Assembly of United Nations, and not a Full Member, a settlement has been made to the autonomy of the Holy See: the Vatican Secretariat of State – according to the new article 24 of the law n. 127– will create its own list of terror organizations based on the one issued by the United Nations, so keeping its autonomy, and at the same time showing to be sensitive to the international security goals.

Some superficial observer would think that Holy See is not working seriously. It is not true. Holy See is working seriously, and not to respond to internal problems, or to answer to European or Italian claims. More probably, Holy See wants to give its contribution to achieve strategic goals as the countering to money laundering and to international terrorism financing.

After adopting the new law, the Holy See began a complex path to adequate to the international standard, according to GAFI (Financial Action Task Force) recommendations. This path would finally lead the Holy See to be enrolled in the «White List», the list of states most active in preventing and fighting the financial crimes.. In november, advisors of the Council of Europe made an on-the-spot investigation in Vatican. The news was not widely covered by the medias, and it did not seem to interest analysts and public opinion.

Still, the motu proprio delivered one year ago signed the change of an era. Before it, Vatican did not have an Authority of Financial Information. Before it, Vatican boundaries were just with Italy, and monetary agreements were to be signed just with Italy. Vatican Lira (the coin issuanced before euro) was not the international lira, but Italian lira. The entrance in the European Union changed everything. The changes did not deal just with the Vatican. But the changes dealing with the Vatican had been widely covered by medias, mainly focusing on the I.O.R. issue. This interest letted show – according to some Vatican insiders – other kind of goals, as – for example – the attack to the sovereignty of Vatican City State, in order to undermine the diplomatic importance of the Holy See.

Let us make a step back in time. February 2009: European Commission communicates that the Monetary Agreements with Monaco, San Marino and the Vatican are to be reviewed. If the three countries wants to remain hooked to the European Monetary System, they need to uniform to European norms and procedures, peculiarly for what concerns the countering of money laundering and of financial aids to terrorism.  The European Commission also asked to introduce a new uniform method for calculating the ceilings of euro coins issuance of the three countries and any country that would sign a Monetary Agreement with the Community in the future. In order to reach the objectives of the revisions, ad hoc bilateral commissions had been established.

Since February 2009, Vatican and European Commission advisors (Italy is part of the table as observer) start up the job to define the new monetary agreement. European Union conditions immediately seem to restrictive. The relationship between Holy See and European Union are fraught. Vatican has the will to keep its autonomy, and so every single point of the agreement needs to be discussed and weighed up. But time is short. Mons. Carlo Maria Viganò, then secretary of the Governatory of the State of Vatican City, even proposed to unhook Holy See from the Euro area, in order to let the Holy See avoid to be subjected to too restrictive conditions. In some ways, it was a prophetic idea, considering the state-of-the-art of euro area and the choice of some countries – e.g. Great Britain – to keep out from the euro area. Someone also propose not to close the agreement within the year 2009, and to postpone the closure of the agreement to 2010. Hierarchies of the Holy See did not take in consideration both of the hypothesis. The costs would be so high, both for political and economical reasons. A postponing would bring – for example – to a suspension of the coins issuance and stamps issuance, which are among the most important incomes of Vatican City State. It is too complicated.

The monetary agreement is finally signed on December, 17th 2009. It is a day full of tensions. The monetary agreement would be signed contextually by Joaquin Almunia, Europen commissioner for Economical and Monetary Affairs, and mons. André Dupuy, Apostolic Nuncio to the European Union. Almunia refuse to sign the agreement in the same room with the pontifical representant, and so Dupuy and Almunia sign the agreement each one in their own office. Almunia fairly slight the Holy See, also because of the fraught relationships between the Spanish Socialists and Catholic Church. The same Almunia, once he will be appointed as European Commissioner for Concurrency, will start the procedure against the Italian State for favoritism toward the Church because of a special fiscal regime – in fact the fiscal regime enjoyed in Italy by Churches that signed a Concordat with Italian State.
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Inside the Vatican, things goes on quickly, even because time is short. The Vatican Law 127 is adopted and it is decided to extend the effects of the new regulations to the Holy See via a motu proprio by Benedict XVI. The Motu Proprio is released the 30th of December 2010, right in time not to let the agreement lapse. According to some Vatican insiders, the institution of the Authority for Financial Information would mean that the same Ettore Gotti Tedeschi, president of the Commission of Vigilance of the I.O.R., is not given a blank cheque by the Pope, since the I.O.R. itself is subjected to monitoring.

But it is not downhill from there. In September 2010, two money transfers of the I.O.R. are subjected to preventive seizure for a suspected  violations of the norms against money laundering. I.O.R. moved money from an account it owned toward the Credito Artigiano ,a «friend bank», whose president, Antonio De Censi, seated in the Commission of Vigilance of the I.O.R. The I.O.R. ordered Credito Artigiano to make two transfers with the money in that same account: one of 3 million to an account at Banca del Fucino in Rome, and another of 20 million to a JP Morgan account in Frankfurt. Both the account were owned by the I.O.R.

The Banca d’Italia (Bank of Italy) demanded detailed information on the ownership of the accounts of the I.O.R. and the recipients of the transactions, but all the explanations are considered not sufficient. The money are seized, waiting for further investigations. They will be un-seized just when the Vatican counter money laundering regulations has come into effect.

In the meantime, Ettore Gotti Tedeschi – taking an  unprecedent and (according to many insiders) questionable decision – agreed to be questioned by the magistrates of Rome, and is questioned in the offices of the public prosecutor in Rome. His deposition filled 91 pages of transcripts. In it, he explained his action as «a demonstration of the desire to comply with a new era», and he also explained why and how the transfer took places. The magistrates did not deem satisfactory the clarifications given.  Gotti Tedeschi’s deposition created a disagreeable precedent in the diplomatic relationships between Holy See and Italy: if Holy See is a sovereign country, magistrates of a foreign country – Italian ones included – must submit a request internationally,forwarding the request through diplomatic channels to the Holy See as a foreign state, to question one of its employees. More. The president of the body of a country cannot be questioned from a judicial authority of another country but renouncing his immunity. Otherwise, his personal choice would imply to the a de facto demission to the immunity of the body itself. Gotti Tedeschi’s choice is something incomprehensible in terms of international relations.

This is one of the topics in discussion within the Authority for Financial Information, headed by card. Attilio Nicora (former president of the A.P.S.A., a sort of “central bank” of the Vatican) and leaded by a directive council that enlists among his members Giuseppe Dalla Torre, one of the most authoritative and trusted people of the Holy See. Excepted Nicora, Dalla Torre and an internationalist jurist come from other charges within the Holy See, many members of the Authority for Financial Information come from Italian banks and from Bank of Italy, where they were not appointed in important charges. Is the composition of the board coherent with the universality of the Holy See, whose employees are traditionally chose internationally? The imbalance to Italy is considered by many Vatican insiders a sign of weakness and source of risks, more than of opportunity, since the troubles of the Holy See came from a request of the Bank of Italy headed by Mario Draghi (now president of the European Central Bank).

On September, 14th 2011, Holy See delivered to European Union a preliminary paper, in order to illustrate the normative and institutional framework of the Holy See and of Vatican City State, and to explain the initiatives issued to adequate the regulations to the international standards. At the end of November, the advisors of the European Council made an on-the-spot investigation. Contrary to expectations – maybe especially to Bank of Italy’s expectations – it seems that the I.O.R. has been found healthy regarding international standards.

At the half of 2012, MoneyVal – the body of the Council of Europe that ensure that its member states have in place effective systems to counter money laundering and terrorist financing and comply with the relevant international standards in these fields – will discuss the report on the Holy See and on the State of Vatican City. In the meantime, the reformation of Vatican finance is intensively in progress. The game is not yet over, and no one knows how it will end.

In fact, there are still several steps to do. The Authority for Financial Information was created as the Vatican issued new laws to fight money laundering and terrorist financing in a major effort to comply with EU norms and shed its image as a tax haven mired in secrecy and scandal. The Vatican had pledged to pass such legislation by when it entered into a monetary agreement with the EU in December 2009. It is commonly thought that the effort went into high gear following the money laundering probe at the Vatican bank, which greatly embarrassed the Vatican and its bank chairman, economist Ettore Gotti Tedeschi. Actually, the steps were already ready to be done. But, after the laundering probe, everything has been presented – even by media – as part of the Gotti Tedeschi’s effort for transparency, and this annoyed the former president of the Ior, Angelo Caloia.

Cardinal Attilio Nicora had been nominated president of the Authority for Financial Information.  For a few months, Nicora also remained president of the Administration of the Patrimony of the Apostolic See, a sort of Vatican Central Bank. But there had been questions about possible conflicts of interests, given Nicora’s dual roles.  In May, a Dutch liberal member of the European Parliament, Sophie in ‘t Veld, formally asked the European Commission to look into whether the Vatican’s financial authority can be truly independent given Nicora’s jobs and whether there wasn’t a conflict of interest. So, Nicora asked to be relieved of his administration job to focus exclusively on the financial authority, and Pope Benedict XVI agreed.

In fact, Nicora’s job is not that easy. Inside the Authority of Finacial Information, there are two different points of view on how to procede to be enrolled in the ‘white list’. The first one is carried out by Ettore Gotti Tedeschi, president of the Ior (Institute for Religious Works) and his ‘disciples’. Marcello Condemi was the attorney who wrote great part of the new legislation for the prevention and countering of illegal activities in the financial and monetary sectors. Francesco De Pasquale, lawyer, has been appointed director of the Authority for Financial Information. They had both been backed by Ettore Gotti Tedeschi, and they share with the president of the Ior the aim to show the Holy See the most transparent they can. Even if the Authority for Financial Information is to control the Ior itself. Even if the Prefecture for Economic affairs – soon there will be a new prefect – has itself the charge to monitor Vatican’s financial movements.

On September 30, Gotti Tedeschi agreed to be questioned by the magistrates of Rome, like any Italian person of interest. His deposition filled 91 pages of transcripts, portions of which were leaked to the press. Gotti Tedeschi explained his action as «a demonstration of the desire to comply with a new era».

This new era was not free from complaints within he Vatican walls.  In 1993, when he was called for questioning by the magistrature of Milan, the president of the IOR at the time, Angelo Caloia, got the magistrates to submit a request internationally, with the request forwarded through diplomatic channels to the Holy See as a foreign state. In 2010, many within the Vatican would have reacted in the same way, but Gotti Tedeschi’s line prevailed.

Holy See is a State with its own sovereignty. Every single country can use its money at his personal discretion. If a country wants – through diplomatic channels – secretly finance any sort of organism or association, no one has the right to control the money they transfer. The same can do Holy See. One of the strong points of the accusation on Wojtyla beatification was brought on the basis of the money Wojtyla and his entourage would eventually send to Solidarnosc. A Vatican official – who wants to remain anonymous – explains that «this is part of the mission of the Church. The Church is free to use its money in the way is believed more proper, in order to help the populations to set free from the oppression or to help Christian communities wherever in the world».

The risk for the Holy See is to renounce to part of its sovereignty to respond to GAFI’s requests in order to enter in the White List. Holy See commitment has – until now – been higher than the one of any other State. When the Holy See will be enrolled in the White Lists – the Vatican official says –  it will commit itself to make its peculiar moral impact weigh on the World financial organisms. On the other hand, it has to watch out for not being considered on a par of a Ngo Organization, with the duty to give the complete accountability of their sources of money and the way they use their money.

The request for transparency seems to be the subtle part of the campaign to eject the Holy See from the concert of nations.  Since April 6, 1964, the Holy See has been a permanent observer state at the United Nations. In that capacity, the Holy See has since had a standing invitation to attend all the sessions of the General Assembly, the United Nations Security Council and the United Nations Economic and Social Council. As a matter of diplomatic courtesy,  the Holy See was also allowed to make formal policy statements in the General Assembly, and it was invited to observe all open meetings of the intergovernmental subsidiary bodies of the General Assembly.

From 1999, the non-governmental organization, Catholics for Choice, lobbied against the participation of the Holy See in the United Nations, arguing that the Holy See is a religious organization and not a state, and that, therefore, it should not have the right to participate, in a position analogous to that of states, in the intergovernmental decision-making process on social, cultural and economic matters. No State supported this initiative. On the contrary, the United Nations General Assembly confirmed further its observer status within the UN, through its Resolution 58/314 of 16 July 2004. Through that resolution, all Member States of the United Nations decided to confirm to the Holy See its status as a Permanent Observer State of the United Nations and to grant it all the rights of full membership except the rights to vote and to present candidates.

Currently, the Holy See has the right to participate in the general debate of the General Assembly and to intervene in the discussion of any issue inscribed in the agenda of that assembly. It has the right to participate in all meetings open to all Member States, the right to make points of order and to exercise the right of reply, the right to circulate proposals and position papers as official documents, and the right to co-sponsor draft resolutions and decisions. Commenting on that resolution, Archbishop Celestino Migliore, the then Holy See Permanent Observer to the United Nations, said: «We have no vote because this is our choice». He added that the Holy See considers that its current status «is a fundamental step that does not close any path for the future. The Holy See has the requirements defined by the UN statute to be a member state and, if in the future it wished to be so, this resolution would not impede it from requesting it».

When the Permanent Observer of the Holy See speaks in the General Assembly, everybody is silent. The statements of the Holy See are took in great consideration. Its international status is prestigious. The Holy See took advantage of the prerogatives of its observer status to incorporate Christian values within the decisions and recommendations of the United Nations. Notable were its successful efforts, in cooperation with like-minded countries, to ensure the adoption of a Nations Declaration banning all forms of Human Cloning and to prevent the adoption of a proposed resolution on sexual orientation and gender identity.

Now, the Holy See’s international prestige is trying to be undermined. And the request for transparence can be – for many inside the Vatican – the first step to make of the Holy See an organization on a par of a Ngo. Was not this the Economist asked in 2007?