Money laundering charges cause Vatican to intervene
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Although the Vatican froze funds belonging to Monsignor Nunzio Scarano after the Italian police arrested him, the hold on his account at the Vatican’s Institute for Religious Works and his suspension from work are related to a separate case of alleged money laundering.
Msgr. Scarano, a suspended accountant for the Administration for the Patrimony of the Apostolic See, known by its Italian acronym APSA, is currently under arrest and charged with planning to illegally bring 20 million euro in cash into Italy aboard a government airplane.
But Msgr. Scarano is also under investigation for a separate alleged instance of money laundering, which is what triggered his funds being frozen by the Vatican on July 9, according to a source who works in one of the Vatican offices related to APSA.
According to a July 11 statement from Father Federico Lombardi, director of the Holy See Press office, the Vatican investigation “was triggered by several suspicious transactions reports filed with the Vatican Authority for Financial Information.”
Fr. Lombardi also stressed that the investigation “can be extended to additional individuals.”
Msgr. Scarano is charged with money laundering using his account at the so-called Vatican bank.
The public prosecutor of Salerno, the southern Italian town where Msgr. Scarano was born, filed the charges.
The investigation concerns transactions Msgr. Scarano made in 2009.
At that time, he took 560,000 euro in cash out of his personal Vatican bank account and carried it into Italy, to help pay off a mortgage on his Salerno home.
According to the Salerno public prosecutor, Msgr. Scarano asked 56 close friends to accept 10,000 euros in cash in exchange for writing a check of the same amount to deposit the money into an Italian bank account.
Questioned by the public prosecutor, Msgr. Scarano insisted that the origin of his money is clean, and that it comes from donors.
In fact, Fr. Lombardi’s July 11 statement speaks about “several suspicious transaction reports,” which seems to indicate that the monsignor carried out a number of similar operations.
The freezing of his funds is unprecedented in the history of the Vatican financial institute.
The first version of the anti money-laundering law that the Vatican submitted to the European evaluators of the MONEYVAL committee did not satisfy them when it came to freezing suspicious funds.
The revision of the law in Jan. 2012 introduced – according to the MONEYVAL report released on July 2012 – “some welcome assistance in this area.”
This is also the first time that the Vatican has announced it had frozen funds in an IOR account, giving new impetus to the house cleaning efforts of the Institute’s new president, Ernst von Freyberg.
The Vatican’s finances have been – rightly or wrongly – seen as lacking transparency and not open enough to international cooperation.
Since the moment he took the post over, von Freyberg called this “a misperception” and proclaimed his commitment to transparency and improving the Institute’s image in the media.
In the midst of the scandal caused by the arrest of Msgr. Scarano, the Vatican financial institute was shaken by the unexpected resignations of its general director, Paolo Cipriani, and his deputy, Massimo Tulli, who both stepped down on July 1.
Fr. Lombardi stressed that “over the past weeks, the IOR nominated a Chief Risk Officer at Directorate level with a specific brief to focus on compliance.”
The chief risk officer is Antonio Montaresi, a manager who worked at the Promontory Financial Group. He was hired by the Institute to review all client relationships and the anti-money laundering procedures it has in place.
But the transaction Msgr. Scarano is actually under arrest is linked to him allegedly trying to bring 20 million euros in cash into Italy from Switzerland aboard an Italian government plane.
The money supposedly belonged to Paolo, Cesare and Maurizio D’Amico, three brothers from an Italian family of shipping magnates.
According to investigators, Msgr. Scarano was the mastermind of the plot that included Giovanni Maria Zito, a suspended agent of the Italian domestic intelligence agency, and Giovanni Carenzio, a financial broker.
Carenzio reportedly refused to go ahead with the deal, leading to the collapse of the plot.
Once the news of investigation into Msgr. Scarano broke, Administration of the Patrimony of the Apostolic See suspended him from the service.
A former banker, Msgr. Scarano has been often described as being in charge of “accountability” for the patrimony administration, which handles the majority of the Vatican’s funds.
In fact, a source who works at the Administration and asked for anonymity said in a July 12 conversation with CNA, “Msgr. Scarano had nothing to do with the accountability.”
The source also said that “the top officials of the APSA were not happy with Msgr. Scarano’s behavior, but never made the decision to remove him from his post, probably because he was well known inside the sacred walls and there was no intention for rumors to be raised up.”
Originally published at Catholic News Agency on 15 July 2013. Used by permission, all other rights reserved.