JPMorgan Chase is shutting down the Vatican’s bank account with its Milan branch due to a “lack of transparency,” according to Reuters.
“The Vatican bank, also known as the Institute for Works of Religion (IOR), is having its account phased out and closed by March 30,” Business Insider’s Julia La Roche reports, “because it apparently ‘failed to provide sufficient information on money transfers.’”
Needless to say, this is a setback for the Holy See as it attempts to qualify for Europe’s “white list” of financial institutions that meet all international regulatory standards on money-laundering and tax fraud.
“Italy's leading financial daily Il Sole 24 Ore reported at the weekend that JP Morgan Chase in Milan had told the IOR of the closing of its account in a letter on Feb. 15,” Philip Pullella and Lisa Jucca of Reuters report. “The letter said the IOR's account in Italy's business capital would gradually be phased out starting on March 16 and closed on March 30.”
Two things should be noted: first, this isn’t the first time the Vatican has been suspected of engaging in financial fraud. Second, something should be said about the timing of the bank's decision.
As to the first point: The Vatican’s finances have been under scrutiny for some time. Regulators are investigating €1.5 billion that passed through the Vatican's Milan account. Investigators refer to this account as a "sweeping facility," which means the account was emptied at the end of each day for an 18-months period and all funds were transferred to another IOR account in Germany, according to Il Sole 24 Ore.
Furthermore, the Vatican is still dealing with negative press it received in September, 2010, when investigators froze €23 million ($33 million) in funds in two Italian banks after opening an investigation into possible money-laundering scheme.
“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," Reuters reports.
Adding to the growing list of Vatican woes is the "Vatileaks" scandal, in which documents, including letters to Pope Benedict, were published by Italian media outlets.
“Some of the leaked documents appear to show a conflict among top Vatican officials about just how transparent the bank should be about dealings that took place before it enacted its new laws,” Reuters reports.
So JPMorgan is simply reacting to reasonable concerns over possible financial indiscretions, right?
This brings us to our second point, that is, the timing of the bank's decision. True, the aforementioned concerns over the IOR’s finances have raised some eyebrows, but the Vatican has since responded.
For instance, last year the Vatican formally adopted internal laws to comply with international standards on financial crime and they now comply with the rules of the Paris-based Financial Action Task Force (FATF), according to Reuters.
Moreover, the IOR has created an internal Financial Information Authority (FIA) and has “committed to comply with international anti-money laundering standards and liaise with the group and law enforcement agencies,” according to the report.
Which brings us back to the question: why did JPMorgan decide that now was the time to "phase out" the account? Investigations haven’t presented any new information, the Vatican has enacted major reforms, and talk of money-laundering and tax fraud are still just allegations.
Perhaps JPMorgan chose to close the account after the U.S. State Department decided to include the Vatican on its “financial crimes” list.
“For the first time, the Vatican has found itself on the U.S. State Department’s list of potential money-launderers,” The Blaze’s Billy Hallowell reported last week.
"According to the State Department, the Vatican made the list because it is considered vulnerable to laundering and because it had recently put a program into place to prevent financial abuses," he added.
But much like JPMorgan's decision to close the Milan account, some found the timing of the State Department's inclusion of the Vatican on its "financial crimes" list a little odd: "Clearly, there are issues of concern, but the Catholic Church is taking measures to address these elements."
Were either of these decisions aimed at the Holy See's finances really necessary?
Considering the fact that the Catholic Church is currently engaged in a culture war with the Obama administration (and the world at large), a few critics believe we are witnessing much more than a mere pursuit of "financial transparency."
Watch Glenn Beck explain his take on the recent developments (via GBTV):
(H/T: Business Insider)