Pope to Publish New Anti-Money Laundering Decree in Vatican

Pope Benedict XVI is set to publish a decree on Thursday to fight money-laundering in the Vatican, three months after an investigation was launched into two senior figures at the Vatican bank.

Benedict's 'Moto Proprio' document, which will be published at noon (1100 GMT), concerns "the prevention and opposition to illegal financial activity," according to a Holy See press release.

The Vatican will set up a new financial authority in an attempt to bring the Holy See in line with international standards and "fight against money laundering and the financing of terrorism."

By promising to adhere to European rules on money-laundering laid down by the Organization for European Economic Co-operation (OEEC), the Vatican hopes to make it onto the "White list" of countries compliant with strict financial controls.

Illegal financial activity will then be punished under current Italian laws, including possible imprisonment of six months to a year, and fines from 5,000 to 50,000 euros (66,000 dollars), according to Italian media reports on Thursday.

The changes come in the wake of an investigation into the bank -- also known as the Institute for Religious Works (IOR)- for alleged violation of money-laundering rules.

In September, Italy's financial police seized 23 million euros from IOR after the financial intelligence office at the Bank of Italy noticed two operations by the bank that it deemed suspicious.

The Vatican bank's president Ettore Gotti Tedeschi and chief executive Paolo Cipriani were then accused of violating laws on disclosing financial operations. Both men deny any wrongdoing.

Gotti Tedeschi, whose appointment in 2009 was greeted as a move towards greater transparency at the IOR, said he was "profoundly humiliated and mortified" by the probe and that the operations were simply transfers of money between different IOR bank accounts in order to buy German bonds.

At the time, the Vatican said the IOR, which manages bank accounts for religious orders and Catholic associations, was working with the Bank of Italy and international organizations to adhere to tighter transparency standards.

The investigation risked casting another shadow on the Vatican after the priest pedophilia scandal that has rocked the Catholic Church around the world.

It was also a fresh blow to the bank itself, whose reputation was badly hit in the 1980s.

In 1982 IOR was caught up in one of Italy's biggest fraud cases when Milan's Banco Ambrosiano -- of which it was the main shareholder -- collapsed.

Banco Ambrosiano's chairman Roberto Calvi, known as "God's Banker" because of his ties with the Vatican, was found hanging from a London bridge.(AFP)

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