The Vatican flag. / Bohumil Petrik/CNA.
The Vatican’s financial watchdog will soon get a new director responsible for its supervision unit. Carmelo Barbagallo, president of the Vatican Supervisory and Financial Information Authority (Autorità di Supervisione e Informazione Finanziaria, or ASIF), broke the news in a 20 March interview with Vatican media.
The news appeared in one of the very last lines of the text, and in fact, seemed to be a marginal issue. In the interview, Barbagallo praised the Authority’s work so far and underscored its partnership with the Egmont Group, which gathers 160 financial intelligence units worldwide.
Currently, the supervision unit is overseen by Alessandra Coni, as Barbagallo explained in an interview with the Italian newspaper Corriere della Sera on 3 July 2020.
In the interview, Barbagallo also noted that the two units of the Authority were led by women: Coni is at the helm at the supervision unit, while Diana Rocco leads the financial intelligence unit.
The watchdog, formerly known as the Financial Information Authority (Autorità di Informazione Finanziaria, or AIF), was subsequently reformed and a new unit added, the Regulation and Legal Affairs Unit.
Barbagallo did not reveal who would be the new person at the supervision unit. But the upcoming appointment could be significant.
If the new director comes from an Italian institution, it would confirm a growing Vatican trend.
This trend emerged early in the Vatican financial watchdog’s journey. Francesco De Pasquale, first AIF director and then president, came from the Bank of Italy. The board members were all Italians and, except for Giuseppe Dalla Torre, all came from the Bank of Italy milieu.
The Vatican’s anti-money laundering law was then reformed, and the AIF took on a more international aspect. The director and then president was René Brülhart, a top expert on money-laundering issues, while the board included only one Italian, Maria Bianca Farina, a manager from Poste Italiane, the Italian postal service.
Pope Francis recently restored the Italian-Holy See connection, after the so-called Sloane Avenue scandal: the controversial Secretariat of State investment on a luxury real estate in London.
The scandal came while both the mandates of the AIF president and director were expiring. Brülhart was not confirmed as AIF president, and Carmelo Barbagallo, coming from the Bank of Italy, was called to replace him. The director Tommaso Di Ruzza was not renewed either and was replaced by Giuseppe Schlitzer, who also collaborated with the Bank of Italy in the past.
It is also noteworthy that Diana Rocco comes from the Bank of Italy’s financial intelligence unit.
Other Vatican appointments confirmed the trend. The president of the Vatican Tribunal is Giuseppe Pignatone, a retired Italian public prosecutor. The Vatican’s prosecutors are all Italian, and either currently work or previously worked for legal firms in Italy. Saverio Capolupo, the former commander general of Italy’s financial police force, is now president of the Monti Foundation, which manages the disgraced IDI hospital.
Beyond this piece of news, Barbagallo’s interview with Vatican media has some other interesting points.
He stressed that the Holy See made a “significant” choice to join the Egmont Group, “a global forum of the Financial Intelligence Units of over 160 countries, that share good practices for the international cooperation and the exchange of financial intelligence information.”
During the in-flight press conference coming back from Japan in 2019, Pope Francis stressed that Egmont Group is “a private group.” At that time, the Egmont Group had unplugged the Vatican Financial Intelligence Authority from its secure network to exchange information. The reason was that during the Sloane Avenue investigation, Vatican police had seized some financial intelligence documents in the Vatican financial watchdog offices, thus jeopardizing the institution’s autonomy.
Egmont re-admitted the Authority into its secure network only when the AIF and the Vatican tribunal signed a memorandum of understanding about the documents’ use.
In the interview, Barbagallo also praised how the Vatican anti-money laundering system has been perfected over time. He especially underscored the 2013 anti-money laundering law, followed by the AIF’s new statutes in 2014.
He said that the monitoring system had been increasingly strengthened, noting that there had been several memoranda of understanding between the AIF and its counterparts all over the world.
After praising the past, Barbagallo observed that under his presidency the AIF’s statutes were amended. The AIF changed its name to ASIF, thus “rationalizing and strengthening its governance.”
The change of name had been discussed already in 2012 when Cardinal Attilio Nicora was the Authority’s president. Nicora finally decided to keep the name as changing it might have created some confusion.
Also, the amended statutes enhanced the ASIF president’s power, in a sort of “return to the past.”
In the 2014 AIF statutes, the Authority’s president was designed as a guarantor, while the director was in charge of operational matters and the board outlined the general strategies. The new statutes seem to limit the director’s powers, while the board has taken on a more executive role. This might prompt some issues for an eventual conflict of interest, since the board members also work for other institutions.
While praising the work done so far, Barbagallo’s interview did not address some of the issues at stake. In the end, Barbagallo has never faced a press conference presenting ASIF’s work and criteria.
The ASIF president stressed that the Authority was “briskly working,” waiting for Moneyval’s progress report. Moneyval is the Council of Europe’s committee that evaluates how its member states fit international standards in countering money-laundering and the financing of terrorism.
The Holy See joined Moneyval in 2011. In 2012, Moneyval submitted a comprehensive report on the Holy See/Vatican City State, followed by three progress reports in 2013, 2015, and 2017.
The upcoming progress report will be issued during Moneyval’s plenary meeting, scheduled for April 26-30. The report will be about the effectiveness of the anti-money laundering system. Moneyval will look into the Vatican judicial activity of the last five years to assess if the Vatican prosecutor has followed Moneyval’s recommendations and how.
The report will say if the recent trials and investigation of Vatican financial issues will be enough for the Vatican judicial system to pass the test. Moneyval had in the past criticized the effectiveness of the system.
Its 2017 report noted that “the overall effectiveness of the Holy See’s engagement with combatting money laundering depends on the results that are achieved by the prosecution and the courts.”
The report also stressed that “the results on the law enforcement/prosecutorial/judicial side two years after the last review remain modest.”