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  • Dec 27, 2014
  • Updated: 1:24pm
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New Vatican bank head says mission is total transparency

Ernst von Freyberg, the president of the Vatican bank, aims to clean up the murky image of the bank and steer it to total transparency and compliance with international standards on fighting terrorism financing, money laundering and tax evasion.

PUBLISHED : Thursday, 13 June, 2013, 2:36pm
UPDATED : Thursday, 13 June, 2013, 2:36pm

Don’t even think of calling Ernst von Freyberg, the president of the Vatican bank, God’s New Banker.

“I don’t appreciate incorrect and silly descriptions,” he said in his Vatican office, shrugging off a nickname that some have given him since he assumed his post four months ago.

Still, von Freyberg talks as if he is on a mission from God: to clean up the murky image of the bank and steer it to total transparency and compliance with international standards on fighting terrorism financing, money laundering and tax evasion.

The European anti-money laundering committee, Moneyval, said in a July report that the bank, formally known as the Institute for Works of Religion (IOR), still had some way to go and von Freyberg said he is taking the challenge very personally.

Von Freyberg, 54, a German lawyer, has started a review of the IOR’s some 19,000 accounts, mostly held by Vatican employees and departments, orders of priests and nuns, and charities.

With only 114 employees, last year it had assets of US$7.1 billion (HK$55.1 billion) under management and profits of 86.6 million euros (HK$894.9 million), used to support Catholic activities around the world. It does not lend money.

Last year, the Vatican detected six possible attempts to use the Holy See to launder money. At least seven have been detected so far this year.

“I get a report on every single suspicious transaction once a week. I follow all cases as they go through the system,” he said in an interview at the bank’s offices in a mediaeval tower, whose entrance is in a courtyard just below the papal apartment.

Staff are combing through about 1,000 accounts a month to pinpoint owners and who has signature authority, he explained, speaking under a large oil painting illustrating Jesus’ teaching about rendering unto Caesar what is Caesar’s and to God what is God’s - guidance on the distinction between earthly and spiritual matters.

“Internal checking is going very well ... we want to make sure that these are customers we want to have,” he said in one of the few interviews since his appointment, adding he had hired US-based Promontory Financial Group as a regulatory consultant.

Asked what he would do if an account of a Vatican monsignor was suspected of improper activity, he said: “I would block the account and report it to the FIA (the Vatican’s Financial Intelligence Authority) regardless of who the person is. Zero tolerance”

Von Freyberg, who speaks enthusiastically and laughs easily, said he did not see himself as a “self-imposed sheriff”, but as “a president responsible for this institute, which includes being responsible that we follow the law”.

The bank is trying to clean up its image after a history of scandals, most notably in 1982 when it was enmeshed in the bankruptcy of Italy’s Banco Ambrosiano, whose chairman Roberto Calvi was found hanging from London’s Blackfriars Bridge.

Von Freyberg said those events took place in a “different legal and cultural framework”.

More recently, Rome magistrates investigating money laundering in 2010 froze 23 million euros held by the IOR in an Italian bank. The IOR said it was transferring its own funds between accounts in Italy and Germany. The money was released in June 2011 but the investigation continues.

“Over the past 10 years the IOR was slow to adapt to a rapidly changing (financial) environment,” he said, adding he was committed to having structures in place by the end of the summer to prepare for a progress report on Moneyval’s recommendations in December.

“We are catching up with transparency. We could have done that better, clearer, and sooner,” he said. He expects Pope Francis to take a personal interest in the bank, “given the amount of negative press coverage we’ve received”.

Von Freyberg, who succeeded Ettore Gotti Tedeschi who was fired last May having been accused of erratic behaviour, neglecting his responsibilities and alienating staff, said he saw his new job as a calling.

“When you get called, because you are Catholic, you don’t say no to such a call.”

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