Vatican Secures First Money-Laundering Conviction and Sentence

On December 27, Vatican News reported that the Holy See Press Office issued a statement announcing that on December 17, Angelo Proietti had been convicted of money laundering and sentenced to 2 ½ years’ imprisonment and confiscation of more than €1 million.  The conviction is significant because it reportedly represents the first time in the Vatican’s history that a person has been tried and found guilty of money laundering under a 2010 Vatican law.

Proietti, a construction magnate in Rome, had reportedly siphoned off approximately €11 million from two companies that pushed them into bankruptcy.  According to a 2016 release by the Holy See’s Press Office, authorities of the Holy See and the Vatican City State initiated the investigation in 2013, based on Suspicious Transaction Reports that related to Proietti and accounts he had at the Vatican bank, the Institute for Works of Religion (IOR).  Subsequently, in 2014 the Vatican seized more than €1 million tied to Proietti, and in 2016 Proietti negotiated a 3-year, 3-month prison sentence with Italian authorities for his fraud.  The December 27 release credited the Vatican Office of the Promoter of Justice, the Vatican Financial Intelligence Authority (AIF), the Vatican City State Gendarmerie, and Italy for collaboration in the investigation.

Note:  In the past, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) had called on the Vatican “to deliver effective results in terms of prosecutions, convictions and confiscation.”  This first prosecution is only a beginning, but it is a beginning, which the Vatican acknowledged “assumes fundamental importance” in its anti-money laundering/counter-terrorism financing (AML/CTF) efforts.

This prosecution should also be regarded as a milestone on the Vatican’s sometimes tortuous path since 2009 toward an effective AML/CTF regime.  Even after Pope Benedict XVI issued an Apostolic Letter in 2010 to comply with European anti-money-laundering directives, the overall pace of reform initially was slow – owing in part to contention within Vatican ranks over how transparent the IOR’s operations should be.  By 2017, however, Italy placed the Vatican on its “white list” of states with cooperative financial institutions, and MONEYVAL noted that the Vatican had made progress in the previous two years and that the AIF was working efficiently as both a financial intelligence unit and as supervisor of the IOR.  In addition, the IOR – which in 2011 reportedly had approximately 33,000 accounts and 20,772 clients (68 percent of whom were members of the clergy), and $8.2 billion in assets under management – closed thousands of accounts belonging to people who no longer qualified.

Earlier this year, the AIF reported that in 2017 it had submitted eight reports to the Office of the Promoter of Justice for further investigation, and had signed 19 Memoranda of Understanding with  counterpart agencies in other jurisdictions and exchanged information in 268 cases.  While that information suggests that the Vatican has quickened its pace in anti-financial crime implementation, the Vatican will need to show in 2019 that it is sustaining that pace.

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