Security & Fraud

Police Raid Prompts Pope To Appoint New Vatican Financial Head

Vatican police

On the heels of a Vatican banking scandal and subsequent police raid, Pope Francis appointed senior Bank of Italy official Carmelo Barbagallo, 63, to head the Vatican’s Financial Information Authority (AIF), Reuters reported on Wednesday (Nov. 27).

In additional fallout from the incident, an international financial watchdog group suspended the Vatican's access to its secure web system, according to reports.  The Toronto-based Egmont Group is a network of over 160 national financial intelligence units that share information about money laundering, fraud and other crimes, the group's Chairman Mariano Federici told The Wall Street Journal on Wednesday.

The suspension is a blow to the Vatican’s financial credibility under Pope Francis, who downplayed the action, saying the group is not an official regulatory body. He focused, instead, on the appointment of Barbagallo, who succeeds Swiss lawyer Rene Bruelhart, who departed after five years when his mandate was not extended.

“I intend to reassure the international system of financial information that all cooperation will be given in full respect of the best international standards,” Barbagallo said in a statement.

The atypical police raids on the Vatican stemmed from a London real estate deal that sparked an inquiry. A search warrant was secured by the Vatican’s own prosecutor and on Oct. 1 police entered the offices of the AIF and of the Secretariat of State, seizing files and electronics like computers and cellphones.

At the time, Cardinal Pietro Parolin, head of the Secretariat, said the London real estate deal was not transparent and “promised to shed light on it.” 

Soon after, AIF was suspended from using the secure network provided by Egmont Group of Financial Intelligence Units based in Toronto, an informal organization with about 165 members.

Two of the five members of the AIF board resigned to protest against what they saw as a weakening of the AIF’s independence as a result of the raids.

Pope Francis addressed reporters on Tuesday (Nov. 26), stating that information seized during the police raid “seems to point in the direction of mismanagement, in the sense that proper vigilance wasn’t carried out” regarding the London real estate deal, the Wall Street Journal reported.

AIF’s second in command Tommaso Di Ruzza was also suspended over “suspicions of mismanagement,” but the pope stressed there was a presumption of innocence.

AIF is tasked with preventing financial crimes and oversee the scandal-ridden Vatican Bank. Last year, Angelo Caloia, the former president of the Vatican bank (also known as the IOR), and his Italian lawyer, Gabriele Liuzzo, were indicted by prosecutors in the Vatican on charges of embezzlement.

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