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Vatican revises its financial law

The Vatican has rewritten its 2010 anti-money laundering law after European inspectors found that it did not fully meet their tough standards to combat the financing of terrorism.

The new law requires the Vatican to create a list of terror organisations based on those issued by the United Nations and requires the Vatican enter into agreements with other countries to share financial information.

The Holy See has been working for years to comply with European norms on money-laundering and terror financing in a bid to shed its image as a secrecy-obsessed tax haven and join the so-called "white list" of countries that crack down on tax fraud.

The Vatican's efforts to get on the "white list" went into high gear after Rome prosecutors in September 2010 seized 23 million euro and placed the Pope's top two bankers under investigation in an alleged money-laundering scheme.

The money was subsequently released and no indictments have been handed down, though the president of the Vatican's Institute for Religious Works, or IOR, and his deputy remain under investigation.

In December, 2010 the Vatican unveiled its first salvo, passing an anti-money-laundering and terror finance law and creating a financial watchdog agency, the Financial Information Authority, tasked with ensuring all Vatican financial transactions comply with it.

In November 2011, inspectors from the Council of Europe reviewed the Holy See's efforts and came back with recommendations that led to the revised law issued by decree Wednesday by the head of the Vatican city-state.

The Holy See made no major announcement of the revision, but the Vatican's foreign minister, Archbishop Dominique Mamberti, referred obliquely to it in an article in the Vatican newspaper L'Osservatore Romano.

The article concerned the Vatican's ratification of three anti-crime treaties that must be adopted to comply with the norms of the Financial Action Task Force - the Paris-based policymaking body that helps develop anti-money laundering and anti-terror financing legislation.

The Archbishop said the ratification of the treaties as well as the Vatican's 2010 law, which he parenthetically revealed had been "modified" on Wednesday, showed the Vatican's determination to adhere to the most rigorous international standards. The changes in the law, the Archbishop wrote, made the Vatican's legislation more detailed, provided for greater financial cooperation between countries and called for higher sanctions for law-breakers.

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