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By NBF News
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IN the biggest single action ever, the Vatican, whose bank is being investigated over money laundering rules, has established laws to bring it in line with international standards on transparency, prevention of terrorism, counterfeiting and fraud. The move by the Vatican is to meet international demands for more financial transparency.

Pope Benedict, according to Reuters, signed a 'Motu Proprio,' a form of executive order, in which the Vatican establishes a set of internal laws which promise that its bank and all other departments will adhere to regulations and cooperate with foreign authorities.

'As of today, all organisations associated with the government of the Catholic Church … become part of that system of juridical principles and instruments which the international community is creating with the aim of guaranteeing just and honest coexistence in an increasingly globalised world,' a Vatican statement said.

The new laws of Vatican City, a 108-acre sovereign state surrounded by Rome, aim to make it comply with the rules of the Financial Action Task Force (FATF), a Paris-based body that lists nations failing to comply with standards on money laundering and terrorism financing.

By adapting the new laws, including establishing a Financial Information Authority (FIA) along the lines of those in other countries, the Vatican commits to comply with FATF standards and liaise with the group and law enforcement agencies.

The new laws will take effect by April 1, after the new FIA is set up and its members chosen, the Vatican said.

The Vatican Bank was in the spotlight in September when Italian investigators froze 23 million euros of funds in Italian banks after they opened an investigation into suspicion of money laundering.

The bank, formally known as the Institute for Religious Works (IOR), says it did nothing wrong but was merely transferring its own funds from one back to another.

Judicial sources have said the IOR had failed to identify the beneficiaries and reasons for the transfers, as is required by Italian anti-money-laundering banking laws. The Italian investigation is continuing.

The Vatican hopes that the new laws will secure its inclusion on the 'White List' of states which comply with international standards of banking.

A Vatican delegation had travelled to Paris in July to meet officials from the Organisation for Economic Cooperation and Development (OECD) on its intention to make the list.

The IOR primarily manages funds for the Vatican and religious institutions around the world, such as charity organisations, religious orders of priests and nuns, and Catholic hospitals.

Significantly, the new laws will affect all of the Vatican's departments, not just its bank.

This means that departments such as the office that looks after missionary activities, which deal with tens of millions of dollars a year, will also be subjected to the same stringent regulations and oversight as the bank.

The IOR was caught up in the fraudulent bankruptcy of Banco Ambrosiano, then Italy's largest private bank, whose president Roberto Calvi was found hanged under London's Blackfriars Bridge in 1982.

Several investigations failed to determine whether Calvi, known as God's Banker, had killed himself or been murdered.

The Vatican denied any responsibility for the collapse of Banco Ambrosiano, in which it held a small stake, but made a 'goodwill payment' of $250 million (£162 million) to Ambrosiano creditors.