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Pope Francis strengthens economic oversight of Vatican foundations

Governorate of the Vatican City State, Vatican City. Credit: Maloutte via Flickr (CC BY-SA 2.0)

Pope Francis issued an apostolic letter on Tuesday clarifying that certain funds, foundations, and entities within the Roman Curia are subject to oversight by the Vatican’s financial departments.

The document, issued motu proprio (on the pope’s own impulse) on Dec. 6, was released in the wake of the new Vatican constitution Praedicate evangelium, which overhauled the Catholic Church’s central government.

Introducing the apostolic letter’s eight articles, the pope said that to consolidate reforms it is “necessary to regulate also the various funds, foundations, and entities that, over the years, have sprung up within the curial institutions and are directly dependent on them.”

He distinguished these bodies, which help curial institutions to realize their aims, from “other foundations, associations and nonprofit entities which, although based in the Vatican City State, are nevertheless born from the initiative of private individuals and are not instrumental to the realization of the proper ends of curial institutions.”

He underlined that the bodies affected by the new motu proprio — defined as “instrumental juridical persons” — were subject not only to curial departments but also the Vatican’s financial oversight offices.

The bodies have three months to adapt to the new regulations after they come into force on Dec. 8.

Article 3 of the motu proprio states that the Vatican’s Secretariat for the Economy — currently undergoing a change in leadership — “exercises supervision and control over instrumental legal persons in accordance with its statutes.”

Article 4 requires the bodies to meet deadlines for submitting budgets to the Secretariat for the Economy, which then presents them for approval to the Vatican’s Council for the Economy.

Either Vatican financial department can request that the bodies submit their accounts for scrutiny to the Office of the Auditor General or an external auditor.

Article 6 explains how the bodies’ assets are disposed of if they are dissolved by the curial departments on which they depend in Church law.

On Tuesday, the Holy See press office also published a new law concerning the juridical persons of Vatican City State, the independent city-state located in Rome which is under the governance of the Holy See.

The Vatican’s official news website explained that the law extended the motu proprio’s application to entities of the city state.

The law — signed by Cardinal Fernando Vérgez Alzaga, president of the Pontifical Commission for Vatican City State, and Sr. Raffaella Petrini, secretary general — was presented to the pope on Aug. 22 and also goes into effect on Dec. 8.

With the new motu proprio and law, the Vatican appears to be addressing a criticism in a 2021 report on the Holy See by the Council of Europe’s monitoring body Moneyval, which noted a lack of “specific and comprehensive provisions in relation to establishing or administering foundations or associations.”

The report also observed that the Vatican financial intelligence unit’s “power to access information did not cover foundations located in and/or dependent from” the Holy See/Vatican City State.

The same report from Moneyval charted the progress of an extended period of regulatory reform under Francis, and that agency noted that it had become “clear that tax evasion is no longer considered to be the main source of money laundering.”

“The dominant typologies suggested by cases and suspicious activity reports include predicate offenses of fraud, misappropriation, giving and receiving bribes, and abuse of office” within the Vatican itself, Moneyval found.

In the weeks leading up to the release of the Moneyval report, which also highlighted the lack of experience and resources among investigators and prosecutors in efforts to combat financial crime, the Vatican issued a number of new regulations aimed at addressing the agency’s concerns prior to publication.

The first, issued on April 29, aimed to combat corruption by senior officials in the curia and in the city state, and that bars investments in companies or businesses “contrary to the social doctrine of the Church.” It also criminalized the Vatican’s bustarella culture of officials exchanging cash gifts.

The second major change to Vatican law, issued by the pope on April 30, allowed for the criminal prosecution of cardinals and bishops in the ordinary court of Vatican City State with papal approval.

Less than one month after the Moneyval report was published, Vatican City prosecutors filed formal charges against Cardinal Angelo Becciu and eight other defendants in the still-ongoing Secretariat of State financial trial.

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