Progress reviews are subject to peer review by the Plenary and ascribe no formal re-ratings to the Mutual Evaluation Report. However, MONEYVAL welcomes clarifications and improvements to the anti-money laundering and combatting financing of terrorism (AML/CFT) legal structure of the Holy See and the Vatican City State and confirms that significant progress has been made.
Upon request by the Holy See and the Vatican City State the MONEYVAL Secretariat agreed to carry out a full progress review. Therefore, the report contains an analysis of progress against the core and, in addition, key recommendations of the FATF, the international standards on combating money laundering and the financing of terrorism.
"The adoption of the Progress Report confirms the significant efforts undertaken by the Holy See and the Vatican City State to strengthen its legal and institutional framework", said Monsignor Antoine Camilleri, Under Secretary for Relations with States, and Head of Delegation of the Holy See and Vatican City State to MONEYVAL. "The Holy See is fully committed to continuing to improve further the effective implementation of all necessary measures to build a well functioning and sustainable system aimed at preventing and fighting financial crimes."
In accordance with the Moneyval Rules of Procedure, the Progress Report will be published fully by the Moneyval Secretariat on its website on Thursday.
The "key achievements" obtained at legislative and operative levels following the Mutual Evaluation Report of 4.7.2012 are summarised here below.
Key achievements at the legislative level
Since 4 July 2012 three Motu Proprio by His Holiness, Pope Francis, along with a series of new laws have strengthened the Financial Intelligence Authority (AIF) and have specified the legal framework with regard to the criminal law system, financial transparency, supervision, financial intelligence and requirements to effectively combat money laundering and terrorist financing:
Strengthening of AIF - Broadening the scope of law enforcement
1. Amendments of the AML/CFT Law of 14 December 2012
The Law on the Prevention and Countering of Laundering of Proceeds of Crimes and Financing of Terrorism N. CXXVII, which came into force on 1 April 2011 and had been amended twice, was further amended on 14 December 2012 to abolish the nihil obstat - the prior consent - of the Secretariat of State for the signature of international agreements ("Memoranda of Understanding" – MOU) by AIF, in order to ensure full autonomy of AIF in its international cooperation (the Law of the Pontifical Commission for the Vatican City State, N. CLXXXV).
2. Motu Proprio of Pope Francis and the Laws on Criminal Matters of 11 July 2013
In accordance with the recommendations of the Mutual Evaluation Report a wide-ranging reform of the criminal law system was enacted (by laws of the Pontifical Commission for the Vatican City State Law N. VIII, Law N. IX), while His Holiness Pope Francis issued a Motu Proprio on the Jurisdiction of Vatican City State on Criminal Matters.
The new criminal laws cover all terrorist offences set forth in the Conventions annexed to the Terrorist Financing Convention as well as a new approach to the administrative liability of legal persons arising from crime. In particular, a modern scheme on confiscation, freezing and seizure has been adopted. The Motu Proprio extended the jurisdiction of the Vatican Tribunal over criminal offences - including the financing of terrorism and money laundering - committed by public officials of the Holy See in the context of the exercise of their functions, even if outside Vatican territory. In addition, by Law N. X of the Pontifical Commission for the Vatican City State a legal framework has been established for the application of sanctions for administrative violations.
3. Motu Proprio of His Holiness, Pope Francis, of 8 August 2013 and the Decree introducing norms relating to transparency, supervision and financial intelligence, N. XI of 8 August 2013, confirmed by the Law introducing norms relating to transparency, supervision and financial intelligence, N. XVIII of 8 October 2013
His Holiness, Pope Francis, by Motu Proprio for the Prevention and Countering of Money Laundering, the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction of 8 August 2013, strengthened the supervisory and regulatory function of the Financial Intelligence Authority and established the function of prudential supervision over entities professionally engaged in financial activities. Furthermore, the Financial Security Committee has been established for the purpose of coordinating the competent authorities of the Holy See and the Vatican City State in the area of prevention and countering of money laundering and the financing of terrorism. The same additional laws introduced norms relating to transparency, supervision and financial intelligence (Decree of the President of the Governorate N. XI, confirmed by Law of the Pontifical Commission for the Vatican City State, N. XVIII).
This new AML/CFT Act of the Holy See and the Vatican City State introduces a comprehensive system in accordance with the international standards to fight money-laundering and financing of terrorism and is a further step towards strengthening the system to actively combat any potential misuse of financial activities within the Vatican City State. It deals with financial transparency, supervision, and financial intelligence, clarifying and consolidating the functions, powers and responsibilities of the AIF. It provides, amongst others, for extended supervisory and regulatory powers of the AIF and empowers it with prudential supervisory functions.
4. New Statute of AIF
With the Motu Proprio of 18 November 2013 His Holiness, Pope Francis, established new organisational structure of the AIF. The new structure clearly defines the roles and responsibilities of its organs, the President, the Board and the Directorate, and ensures that AIF may effectively fulfill its institutional functions with full autonomy and independence, and consistently with the institutional and legal framework of the Holy See and the Vatican City State.
Key operational achievements
Important results of the implementation of policies and regulatory procedures were, amongst others:
1. International cooperation of financial supervisor
Since the adoption of the Mutual Evaluation Report, the Holy See and the Vatican City State have put a strong emphasis on international cooperation. In July 2013, AIF was admitted to the Egmont Group and over the last months has signed MOUs with Belgium, Spain, USA, Italy, Slovenia, the Netherlands and, most recently, Germany. It is currently in the process of signing further MOUs with several Financial Intelligence Units of other countries and will continue to broaden its international network to fight money laundering and terrorism financing.
2. Review and remediation processes in institutions under supervision of AIF
The analysis of MONEYVAL takes note of the conclusion of a preliminary review of the customer data base of the Istituto per le Opere di Religione (IOR) by the end of 2012. It acknowledges an in-depth audit of customer records and remediation, including analysis of transactions, based on the findings of this first phase and under the supervision of AIF that was launched at the beginning of 2013. This process is still ongoing. Furthermore it was noted that by Board resolution of 4 July 2013 the IOR redefined the categories of customers entitled to IOR services and published them in July 2013 on the website of IOR.
3. A functioning AML/CFT reporting System
Since the adoption of the Mutual Evaluation Report, an ongoing trend toward increased reporting of suspicious activity from different reporting entities, with a significant growth in 2013, can be observed. Investigations based on STRs have been started and freezing orders initiated. Due to the remediation process and improved transaction monitoring processes the AIF recorded a significant rise in suspicious transaction reports (STR). In the area of international cooperation, AIF has entered into an active exchange of information with various Financial Intelligence Units and the Holy See and the Vatican City State requested mutual legal assistance on a domestic case.
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