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New financial watchdog agency set up by Vatican

Published 31/12/2010

The Vatican has created a financial watchdog agency and issued new laws to try to comply with rules to fight money-laundering and terrorist financing.

The decrees, which will come into effect on April 1, were passed as the Vatican's own bank remains implicated in a money-laundering investigation that resulted in €23m (£20m) being seized and its top two officials placed under investigation.

Pope Benedict XVI signed the documents this week, saying the Vatican wanted to join other countries in cracking down on legal loopholes that have allowed criminals to exploit the financial sector.

International financial organisations said it appeared the Vatican had taken a step in the right direction.

The decree creates an independent Vatican compliance watchdog, the Financial Information Authority, that is tasked with ensuring all Vatican financial transactions - including those of the Vatican bank - comply with the new laws.

A Vatican spokesman said the move had nothing to do with the seizure of the Vatican account in September. Rome prosecutors seized €23m and placed Vatican bank boss Gotti Tedeschi and his deputy under investigation, alleging the bank broke laws by trying to transfer money without identifying the sender or recipient.

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