ASIF continues along path of financial transparency

By Salvatore Cernuzio

The Vatican’s Supervisory and Financial Information Authority (known by its Italian initials as ASIF) has released its annual report for 2023.

The document noted 123 reports of suspicious activities, with 118 coming from the Institute for the Works of Religion (IOR), commonly referred to as the Vatican Bank. There was a decrease in the number of suspended transactions (only one case; in 2022 there were five) and also in the number of reports sent to the Office of the Promoter of Justice (11, compared to 19 two years ago) – a sign that the system has stabilized within parameters of security and transparency.

Intense domestic and international cooperation

At the same time, internal cooperation with other competent Authorities of the Holy See and the Vatican State, and international cooperation with participation in the Moneyval and Egmont fora, among others, were on the rise. Training experiences have been “intense,” with relationships and the exchange of best practices with the Bundesbank and the Bank of Italy proving particularly fruitful.

The number of memoranda of understanding also increased in 2023, which saw agreements signed in 2023 with nine more countries: Algeria, Azerbaijan, The Bahamas, Curaçao, Lebanon, Senegal, Mauritius, Nepal, and Zambia.

The ASIF has thereby continued to offer a contribution to the recovery of proceeds from criminal activities, making itself a net revenue centre by also exchanging information with its international counterparts.

Barbagallo: the year with the most conflicts

All this in a year, 2023, which – as ASIF President Carmelo Barbagallo points out in his introductory letter to the report – “has actually distinguished itself as the year with the highest number of conflicts since World War II.” Barbagallo notes that "this situation contributes to making international relations ever more complex and difficult,” while at the same time serving “as an incentive to fight against money laundering and terrorist financing at the global level."

“Maintaining and developing a strong network of international relations continues to be a fundamental strategic goal of ASIF in serving the interests of the jurisdiction,” Barbagallo continued.

Barbagallo also emphasized that “fruitful international relations have been matched by equally fruitful relations” within the Vatican with the Office of the Promoter of Justice, the Gendarmerie, and the Office of the Auditor General thanks to “intense collaboration; as well as the multiple opportunities for discussion and insight with the Financial Security Committee, the Secretariat of State, the Secretariat for the Economy (SpE), and the Governorate.

Schlitzer: Engagement in the international arena

For his part, ASIF Director Giuseppe Schlitzer, in the introduction to the document, said: “Engagement in the international arena continued to be a priority for the Authority, primarily with reference to Moneyval, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism incardinated at the Council of Europe.”

He went on to describe the Authority’s “outward projection” with equivalent authorities in other jurisdictions as “significant,” while noting the “assiduous” collaboration with the other competent Authorities of the Holy See and the Vatican City State.

Vigilance over the IOR

The report then delves into ASIF's supervisory activity – in its two components of anti-money laundering and counter-terrorist financing and prudential – with regard to the IOR, the only entity within its jurisdiction that is authorized to carry out financial activities professionally.

As part of the Memorandum of Understanding with the SpE, ASIF monitored the procedures adopted by the IOR to comply with the requirements set forth by the 2015 Agreement with the United States for Tax Compliance and Implementation of the Foreign Account Tax Compliance Act (the so-called FATCA Agreement). The report explains that since 2020, the Office of Supervision has conducted three inspections on the IOR, including a “wide-ranging” prudential inspection, a follow-up inspection and a “targeted” inspection on AML/CFT. 

Moneyval recommendations and European directives

Also “Noteworthy” is the work to revise Law XVIII of November 2023 on Transparency, Supervision, and Financial Information, which became necessary to implement some recommendations of Moneyval's Mutual Evaluation Report (April 2021) and to align some provisions with European directives, as agreed in the Joint Committee (the body that oversees compliance with the Monetary Agreement with the EU).

Suspicious activity reports

As for specific activities, ASIF reports 123 “suspicious activity reports” (STRs) received in 2023, including 118 from the IOR, four from Authorities of the Holy See and Vatican City State, and one from a Non-Profit Organization (NPO), numbers that are in line with those recorded in 2022. On the other hand, reports forwarded to the Promoter of Justice appear to have decreased to only 11 – a figure that, along with others, can be read as representative of a stabilization of security and transparency parameters.

Only one case of suspension of operations

The number of suspensions of operations and transactions also fell, with only one case (involving a “modest” amount of 5,848 euros) that required the use of preventive measures under Article 48 of Law No. XVIII. This marked “a substantial decrease,” in the number of cases that required preventive measures by ASIF compared to the previous two years: in 2021 there were 4 suspensions of operations and transactions and the blocking of a current account, for a total amount of 626,188 euros; in 2022 there were 5 suspensions of operations and transactions for a total amount of 829,050 euros.

Nine memoranda of understanding signed

On the international cooperation front, in 2023 ASIF sent 22 requests for information or spontaneous communications to counterparts, receiving 10 such communications in return.

As mentioned above, there was substantial activity with regard to memoranda of understanding with foreign financial intelligence units (FIUs), with the nine signed in 2023. In fourteen years of activity, the ASIF has seen the number of signed memoranda increase from 67 to a total of 76.

Cash transportation

Finally, regarding cross-border cash transport declarations, in 2023 ASIF recorded an increase in incoming declarations, with 165 declarations amounting to more than 15 million euros (15,462,762); and 361 outgoing declarations, for a total amount of more than 5 million euros (5,201,311). The Authority pointed out that this follows a trend seen since 2019, explaining that the vast majority of the amounts declared are attributable to the activity of Vatican Public Authorities.

Alignment with international standards

The activities described in the report thus show how the Authority continues to pursue those objectives for which it was established in 2010 by Benedict XVI, in particular: high-quality action for the prevention and combating of money laundering and the financing of terrorism, and for financial transparency. The positive results achieved demonstrate a consolidation of the Vatican’s alignment with the best international standards.

Read the full text of the report here.