The Mystery of the Vatican - Australia money pipeline
What we know, and what we don't. A Pillar Explainer.
|JD Flynn||Jan 8||16|
An Australian newspaper called The Australian reported last month that since 2014, billions of dollars have been transferred from the Vatican to bank accounts in Australia, without the knowledge of Australian Catholic bishops, or, apparently, Vatican officials.
The situation is quite murky, and could have ties to ongoing financial scandals at the Vatican, or to other illicit dealings.
Here’s what we know so far:
What happened, exactly?
Austrac, an Australian financial intelligence agency, reported in December that between 2014 and 2020 more than 2 billion Australian dollars had been transferred from accounts in the Vatican City State to accounts in Australia.
In fact, that information was first made available in a report released by Austrac in July, but only gained attention in a second December report.
The second report came after Italian media suggested in October that now-disgraced Cardinal Angelo Becciu was suspected of wiring 700,000 euro to Australia, allegedly to help secure a criminal prosecution against Cardinal George Pell, the Australian who, from 2014 until 2017, was in charge of cleaning up Vatican financial affairs.
Becciu denied that allegation, and Austrac clarified that a far greater sum of money has been wired from Rome to Oz.
It’s not illegal for banks to wire money between countries, but it is apparently unusual for such large sums of money to leave accounts affiliated with the Vatican City State.
And here’s where things get weird: Both Australian bishops and the Vatican say they don’t know anything about the wire transfers. Officials in Rome have told journalists that the Vatican has no record of the transactions Austrac recorded. Multiple sources have told The Pillar that the Australian bishops’ conference has written to Pope Francis asking for an investigation. But, for now, no one has any clear answers.
Also worth noting is that the Vatican might not be in a position to verify Austrac’s records, since the only attempt to audit all Vatican affiliated accounts and assets was a 2017 audit ordered by Pell and cancelled unilaterally by the Vatican’s Secretariat of State. Just weeks ago, Pope Francis issued new laws ordering the secretariat to turn over records and control of bank accounts still unavailable to Vatican financial monitors.
Does this have something to do with Cardinal Pell?
There has been speculation that the transfer of funds has something to do with Cardinal George Pell, who made enemies in Rome during the years he spent cleaning up Vatican finances at the request of Pope Francis. Pell was convicted of child sexual abuse in December 2018, and his conviction was overturned in 2020.
Some of the cardinal’s supporters have suggested that Pell was framed, and the initial October 2020 reports of Vatican fund transfers to Australia suggested that money could have been sent to the country to frame Pell.
But the figures released by Austrac suggest that something much larger than Pell’s trial is a factor. In 2010, the earliest year for which Austrac figures are available, and four years before Pell went to work in Rome, more than $72 million (AUS) was transferred from the Vatican City State to Australia.
In short, there is no evidence in the Austrac records that immediately suggests the transfers have anything to do with a plot to frame Pell. Law enforcement has not found evidence of bribery in Pell’s trial either, even after reports about the possibility were raised last October.
What might the transfers mean?
There are a number of theories regarding the transfers.
One possible explanation is that funds come from “cipher accounts” - accounts held in Vatican banks, especially the sovereign bank APSA, but not belonging to Vatican or even Catholic apostolates. Cardinal Pell made considerable efforts during his time at the Vatican to eliminate such accounts from Vatican banks, out of concern they were being used for money laundering or other nefarious purposes.
Another possibility is that the money comes from accounts held by individuals or corporations using Vatican City addresses, but held in banks outside of Vatican City. The Vatican finance scandal has shown that some businessmen with ties to the Vatican have used Vatican addresses for unrelated businesses, possibly to avoid regulatory scrutiny. This is a likely possibility, and one that would be very difficult for either Vatican or Australian authorities to track completely.
But why would the money be transferred in the first place?
The size of the transfers on record, and their mysterious origin and destination, suggest that in one way or another Vatican City designations were likely being used to mask transfers involving either efforts to hide assets or to launder money. But the details are not clear.
One possibility is that the final destination of funds was actually New Zealand - Australia’s neighbor - which has become a popular place for hiding money, especially as banking regulations have tightened in Switzerland and other European countries in recent years. Australia might have been only a pass through for transfers to New Zealand, or even back to Europe, as part of efforts to conceal complicated money trails.
It is worth noting that exactly this kind of passthrough behavior was employed by BSI, a Lugano based Swiss bank which was for years used by the Secretariat of State. BSI was dissolved by FINMA, the Swiss banking regulator, in 2016, after a damning report found “serious breaches of the statutory due diligence requirements in relation to money laundering and serious violations of the principles of adequate risk management and appropriate organization,” especially in relation to sovereign clients.
It’s not clear whether any of the transfers have to do with the Vatican finance scandal at all. But their existence - and the inability of Vatican regulators to track them clearly - points to the kind of banking and regulatory environment in which other financial scandals have occurred for years - an environment the Vatican says it is still making efforts - however fruitful - to clean up.