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Forgive me, Father, for I have sinned: The Vatican bank repents

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The Vatican is moving forcefully to repair its scandal-prone bank.

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The Instituto per le Opere di Religione, commonly known as the Vatican bank, this week released a report that highlights a year of reforms, including bolstering measures to fight money laundering.

That came just a week after Pope Francis overhauled the bank's oversight group, replacing many of its members with new faces, including the respected Cardinal Thomas Collins of Toronto.

The new pope isn't making his mark solely on religious, social and economic inequality issues, but also on the Vatican's wealthy bank, which posted a 2012 profit of almost €87-million and sits on billions in bonds, stocks, cash and equivalents, gold and real estate.

"As an Institute of the Church we have a particular responsibility to live up to the high standards that are rightly expected of us," Vatican bank president Ernst von Freyberg, who was brought on board in 2013, said in this week's report.

The bank's supervisory board, which has been overhauling processes for a year now, said it received a status report on how things have been going, including an update on the reforms to "adopt best practice compliance risk management and to comply with current Vatican anti-money laundering legislation."

It cited nine areas of work:

1. A "signifcantly expanded" handbook on procedures to battle money laundering, including "data templates in areas such as verification of identification, source of funds, transaction activity, and overall customer risk profile."

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2. New investment in IT systems, with a fresh transaction monitoring tool to be launched this quarter.

3. Screening of some 10,000 client records and new guidelines that mean the bank will deal with Catholic institutions, clerics, current and former Vatican City employees, and embassies and accredited diplomats. Other client "relationships" are being terminated.

4. A forensic transaction review, with outside help, to verify its customer list and review "unusual transactions."

5. Mandatory training of employees.

6. Nomination of a chief risk officer to monitor compliance.

7. Expanding its correspondent bank relationships. The report also said it hopes Italian regulators will allow relationships to resume after more than two years.

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8. Risk management improvements.

9. Transparency improvements that allow the outside word to access information on the bank, in terms of services and governance.

"We have been working very hard to improve compliance, transparency and the processes inside the Institute and whilst there is still a lot of implementation work ahead of us, there is no doubt that we are on the right track and have made significant process," the bank chief said.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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