Scottish Catholic Observer

“The Holy See is perplexed and surprised by the initiatives of the Rome prosecutors, considering the data necessary is already available at the Bank of Italy,” a statement confirmed.

Reports are coming in that Italian authorities yesterday seized £19.5 million from the Institute for Works of Religion, or IOR as the Vatican bank in known, as a precaution. Italian financial police are said to be investigating the Vatican bank’s chairman and director general for alleged mistakes linked to violations of Italy’s anti-laundering laws. The concerns apparently came to light last Wednesday, on the eve of Pope Benedict XVI’s departure for Britain.

The Vatican has said the bank had been working on transparency to comply with anti-terrorism and anti-money-laundering regulations and has expressed full trust in the chairman of the bank, Ettore Gotti Tedeschi, and his director-general.

The Vatican bank is thought to have neglected to communicate to financial authorities where certain monies had money had come from, according to reports in Italy that also stressed that Mr Gotti Tedeschi is not being investigated for laundering money himself but for a series of alleged omissions in financial transactions. In the past the 65-year-old has strongly advocated the need for more morality in the financial sector.

Mr Gotti Tedeschi said he felt ‘deeply humiliated’ by the probe, according to Italian news agency AdnKronos.

The Bank of Italy classified the Vatican bank as a non-EU institution last September, rendering its business with other banks subject to especially close scrutiny.

While the Vatican bank’s primary mission is to manage assets placed in its care that are earmarked for religious works or charity it also oversees pensions for the state’s thousands of employees.