Italian police have arrested a senior prelate in charge of Vatican accounts, an Italian secret service agent and a financial broker, in connection with an investigation into allegations of corruption at the Vatican Bank, known officially as the Institute for the Works of Religion (IOR).

Monsignor Scarano, a former banker, who is the head of analytic accounts at the Vatican’s asset-management agency APSA, was arrested on 28 June on suspicion of corruption and fraud. The prelate was arrested along with Giovanni Maria Zito, an agent in Italy’s domestic intelligence agency AISI, and financial broker Giovanni Carenzio from Rome.

Scarano is accused of paying Zito €400,000 to arrange for €20 million in cash to be flown to Italy from Switzerland on a private jet. The cash was destined for a family who were friends with Scarano.

Scarano has also been under investigation by Italian police for several weeks over the recycling of €560,000 worth of cheques from his diocese, described as church donations, through the Vatican Bank. The prelate was suspended from his Vatican post on 26 June and is currently imprisoned in Rome’s Regina Coeli jail.

The arrests come just 48 hours after Pope Francis established a five-person commission to investigate the bank's affairs, granting them full access to all files. The pope is said to be determined to get to the bottom of long-standing claims of corruption and money-laundering by the bank, which has been the subject of two investigations in the last four years.

The commission is led by Italian Cardinal Raffaele Farina. There are two Americans on the board, Monsignor Peter Wells from the Vatican secretariat of state, and Mary Ann Glendon, a former US ambassador to the Holy See and current president of the Pontifical Academy of Social Sciences. The two other members are French Cardinal Jean-Louis Tauran – one of the five cardinals on the Bank's governing board – and Spanish canon lawyer Juan Ignacio Arrieta.

The Vatican bank was founded in 1942 by Pope Pius XII to manage assets for religious or charitable works. Currently IOR has 112 employees and 19,000 bank accounts, with deposits totalling about €6 billion.