Due to concerns of the Vatican’s lack of transparency concerning their financial matters, JP Morgan plans to close the Vatican’s bank account, Italian Newspapers reported. This could be a blow to the Vatican concerning the International’s “white list” of institutions, which comply with laws against tax fraud and money laundering.
The bank, formally known as the Institute for Works of Religion (IOR), enacted major reforms last year in an attempt to get Europe's seal of approval and put behind it scandals that have included accusations of money laundering and fraud.
On February 15, JP Morgan Chase of Milan informed IOR that it is closing the Vatican’s account, according to a leading Italy business newspaper. The letter stated that the IOR’s account, in Italy’s business capital, would gradually phase out and close on March 30.
Il Sole said JP Morgan Chase informed the IOR that the account was being closed because the bank's Milan branch felt the IOR had failed to provide sufficient information on money transfers.
According to the Italian newspaper, 1.5 million Euros passed through the IOR account in 18 months and was a “sweeping facility”, meaning that the funds in the IOR account was emptied every month and placed in a German account.
Accordingly, this action by JP Morgan Chase is another blow to the IOR, after several scandals already.
In September, 2010, Italian investigators froze 23 million euros ($33 million) in funds in two Italian banks after opening an investigation into possible money-laundering.
The bank said it did nothing wrong and was just transferring funds between its own accounts. The money was released in June 2011 but Rome magistrates are continuing their probe.
Supposedly, the "Vatileaks" scandal harmed the image of the bank. During this scandal, the bank and the Vatican passed sensitive documents back and forth, some of which included a dispute between the bank and Pope Benedict concerning just how transparent the Vatican should be about its financial situation.
Pope Pius XII founded IOR in 1942 and IOR handles the financial matters of various orders and other Catholic institutions. Currently, the Vatican supposedly complies with these laws, both locally and internationally. IOR also established an internal Financial Information Authority (FIA) in compliance with the laws of other countries.
Last year, the Vatican adapted internal laws to comply with international standards on financial crime.
The 108-acre sovereign state surrounded by Rome now complies with the rules of the Paris-based Financial Action Task Force (FATF).
While IOR denies involvement with the collapse of Banco Ambrosiano, thirty years ago, it supposedly was involved with the collapse and paid creditors $250 million dollars due to the incident.
The Church is also set for taxation, due to Italy’s new law of taxing the properties of non-profit organizations, as an effort to get out of their current financial crisis. The Church owns many buildings and properties around Italy. Some citizens of Italy quoted the verse “Give onto Caesar what is Caesar’s…” concerning the taxation of the Church and believe that the Church should pay their fair share of taxes, especially since they make millions of dollars every year.