Experts from MONEYVAL, a Council of Europe unit fighting money-laundering and the financing of terrorism, have today published their first report on the Holy See (including the Vatican City State).
The report measures compliance with international and European standards to combat money laundering and terrorist financing up to 25 January 2012.
It recognises the progress made by the Holy See, declaring that “overall there are adequate arrangements in place to facilitate both national and international co-operation.”
The evaluators also welcome the Holy See’s decision to become a full party to the Vienna, Palermo and Terrorist Financing Conventions of the United Nations in January 2012.”
Yet the report’s authors also indicate that improvements are necessary. They state that: “Further important issues still need addressing in order to demonstrate that a fully effective regime has been instituted in practice.”
The report adds: “Money laundering has been fully criminalised in accordance with FATF standards although effectiveness of implementation has yet to be demonstrated. Financing of terrorism has also been criminalised although the specific criminalisation of financing in respect of certain terrorist acts in relevant UN counter-terrorism conventions is absent.
“No AML/CFT risk assessment has been undertaken. A process has been initiated to commence a risk assessment as the evaluators identified factors present in the system which could potentially increase AML/CFT risks.
“The legislative base for supervision needs strengthening. The evaluators considered that there was a lack of clarity about the role, responsibility, authority, powers and independence of the Financial Intelligence Authority (FIA), as the AML/CFT supervisor. No on-site visits have been conducted and no sample testing of customer files has taken place. It is strongly recommended that the Institute for Works of Religion is independently supervised by a prudential supervisor in the near future, and that “fit and proper” criteria are applied to senior management in financial institutions by the AML/CFT supervisor.”
The report recommends that serious consideration is given to introducing a statutory provision describing those eligible to maintain accounts in the Institute for Works of Religion.
MONEYVAL will continue to monitor implementation of its recommendations through its follow-up procedures, which require the Holy See to submit a progress report within one year.