Vatican bank leaders under investigation

LONDON – In another blow to the Holy See, Italian authorities have begun investigating the top two officials at the Vatican bank on suspicion of violating money laundering rules and have frozen $30 million in the bank’s assets, news reports said Tuesday.

The Vatican, already battered by a scandal over priestly sexual abuse, expressed “puzzlement and amazement” at the allegations and said it was committed to financial transparency.

The two officials under investigation were identified by news media as Ettore Gotti Tedeschi and Paolo Cipriani, the chairman and director general, respectively, of the Institute for Religious Works, popularly known as the Vatican bank. It is responsible for managing the Holy See’s funds, the pension system of its employees and assets earmarked for charity.

The bank, a private entity, is suspected of failing to identify the source of $30 million that it was transferring to a branch of American financial giant J.P. Morgan in Frankfurt, Germany, and to the Italian institution Banca del Fucino, according to Italy’s ANSA news agency.

Italian law requires the identity of account holders be made readily available to financial regulators. Magistrates in Rome initiated the investigation of the Vatican bank out of concern that it failed to adhere to these rules, ANSA reported. Authorities then froze $30 million in the bank’s funds as a precautionary measure.

The Vatican said it was surprised by the investigation because its bank had been in discussions with global financial bodies on how to join the worldwide “white list” of institutions that conform to clean banking standards.

Italy’s RAI television network quoted Gotti Tedeschi as saying he was “humiliated and mortified” by the investigation. The banker, who has headed the Vatican’s financial arm since last year, is known to be a member of the conservative religious group Opus Dei and is an outspoken advocate of ethical financing.