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Court rejects Vatican bid to unfreeze funds

October 20, 2010

by Guy Dinmore in Rome, published: October 20 2010

An Italian court has rejected a bid by the Vatican bank to free €23m of its funds frozen by the Italian judiciary as part of an investigation into a suspected breach of money laundering regulations.

Vincenzo Scordamaglia, a lawyer representing the Institute of Religious Works (IOR), as the Vatican bank is formally known, said he had learnt from media reports on Tuesday that the court, the Tribunale del Riesame, had rejected the case he had filed this month. He said he would lodge an appeal once he had received formal notification.

In the first case of its kind, the Italian judiciary last month froze €23m held by the Vatican bank in an account in Credito Artigiano, an Italian bank. The Vatican bank’s two top officials – Ettore Gotti Tedeschi and Paolo Cipriani – were placed under investigation for suspected breach of anti-money laundering norms.

Mr Gotti Tedeschi has said the case resulted from a “misunderstanding” between the Vatican bank and Credito Artigiano when the Vatican tried to transfer money to two accounts it held in two other banks in Germany and Italy.

Vatican observers said they believed the decision by IOR to challenge the freezing of its funds was the first case of the Vatican, a sovereign state, seeking redress through the Italian judicial system.

The observers said the move reflected the extreme sensitivity of the Holy See as it seeks inclusion on lists compiled by the Organisation for Economic Co-operation and Development, and the Financial Action Task Force of jurisdictions compliant with international norms on tax co-operation and money laundering.

Mr Gotti Tedeschi – a veteran banker and lecturer in ethics in finance – was appointed by Pope Benedict a year ago to bring more transparency to the Vatican bank following its entanglement in the fraudulent collapse of the partly Vatican-owned Banco Ambrosiano in the 1980s and the Enimont corruption trials involving Italian government officials a decade later.

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