Vatican State Does Not Follow FATF Guidelines--But Does It Matter‪?‬

WITH the accession of Cardinal Josef Ratzinger to the papal throne in 2005, some Vatican watchers have predicted a tightening of administrative procedures in the world's smallest sovereign state. The Vatican clearly has a global punch through the Roman Catholic Church, and this has raised concerns about the state's control of its banks amongst its detractors. Key amongst these is the Vatican Bank, (its formal name is the Istituto per le Opere di Religione (IOR) or Institute for Religious Works) which is not an independent central bank in the classic sense, but a public legal entity of the Vatican City State (VCS). It is authorised by international agreement to issue special Vatican Euro coins of up to Euro 1 million annually (with an extra Euro 300,000 on jubilees or years when a Pope dies), although it does not have authority to print its own Euro banknotes. This is according to a concord between Italy acting for the European Union (EU), and VCS, also representing the Holy See--the central core of the Roman Catholic Church--which has separate (and unpublished) accounts to the Vatican State, and which is legally distinct from this sovereign territory. The bank does not have standard banking regulations, and has not formally adopted Financial Action Task Force (FATF) anti-money laundering and anti-terrorist finance procedures. Instead, it has been run according to traditionally handwritten laws issued by various popes called chirographs, through which the Pontiff expresses his legal will. The latest relevant chirograph, which provides the bank with its legal authority and internal governing regulations, was issued in 1990: the Chirographum quo nova ordinatio datur Organismo