IOR account closures part of ongoing Vatican reform

The Vatican Bank has closed the bank accounts of four foreign embassies accredited to the Holy See, because of suspiciously large cash withdrawls and deposits in 2011 by the diplomatic missions of Syria, Iran, Iraq and Indonesia.

The Vatican's financial watchdog believes that the reasons given by the four embassies for such large transactions of cash – up to half a million euro in some cases – were too vague or disproportionate for the amounts involved.

The move is being taken as part of a major reform of the Vatican Bank, better known as Institute for Works of Religion, or IOR, to curb it being used as a vehicle for money laundering or other fraudulent financial activity.

As part of ongoing measures to create more transparency at the bank, so far some 900 clients have been asked to close their accounts, with that number expected to rise.

In another landmark move, on 1 October the IOR published its accounts for the first time, saying its earnings for 2012 were €86.6 million – more than four times higher than in 2011.

Since his election in March, Pope Francis has repeatedly called for a “poor Church for the poor” and in June the pontiff created a commission to investigate the affairs of the bank which has been plagued by a series of scandals and allegations for many years.

Two days after the pontifical commission was established, the bank was rocked by another scandal. Monsignor Scarano, a senior prelate in charge of Vatican accounts, was arrested over allegations that he paid a secret service agent €400,000 to arrange for €20 million in cash to be flown to Italy from Switzerland on a private jet.

The Vatican bank was founded in 1942 by Pope Pius XII to manage assets for religious or charitable works. It has over 100 employees and 19,000 bank accounts, with about €7 billion in assets under its management.

The Vatican bank was founded in 1942 by Pope Pius XII to manage assets for religious or charitable works. It has over 100 employees and 19,000 bank accounts, with about €7 billion in assets under its management.