Vatican Bank Scandal — JP Morgan, HSBC Cease Doing Business with Vatican

By: Sonya Sandage
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An 11-month Financial Times investigation reveals mismanagement at Vatican Bank

Many do not realize that the Vatican manages a banking empire with approximately $7 Billion in assets.


On June 28th, a Vatican cleric, along with a former Secret Service agent, and a financial broker were all arrested by Italian police and charged with fraud and corruption. The three were suspected of smuggling $24 Million by private plane across the border from Switzerland.

Prosecutors allege that the the Vatican cleric who is a former banker, was using the Institute of Religious Works (The formal name for the Vatican Bank) to transport money for Naples businessmen. In Italy, Naples is considered the base for organized crime. The arrested Vatican cleric was also the head of accounting at the Treasury of the Vatican (Administration of the Patrimony of the Holy See.)

This is another shock to Italy following upheaval of Pope Benedict XVI’s resignation in February, the first time in 700 years a pope has resigned. The scandal gave the Bank of Italy under Mario Draghi as well as BIS in Brussels the impetus it needed to start investigations and potential regulatory changes at the Vatican Bank.

Cardinals elect new pope

DAMAGE CONTROL

In July, Peter Sutherland, a non-executive chair at Goldman Sachs International, and the former Attorney General of Ireland, flew to the Vatican. He is a practicing Catholic and unpaid consultant to the Vatican’s Treasury, and was invited by reformers inside the Church to speak to the Council
of Cardinals, the most senior advisors to the Pope. He did not give a public statement, but two who were aware of the closed door proceedings indicate he advised the Council, “Transparency is necessary.”

Regulators have already been eager to get into the Vatican before the arrests. “We cannot have any more scandal. It is so shameful,” a senior member of the Vatican’s financial administration said.

Financial Times interviewed two dozen bankers, lawyers, regulators, and Vatican insiders over 11 months to understand how the Vatican Bank has unnerved bankers, regulators, and governments across Europe and the U.S. The reforms inside Vatican Bank now underway are due to pressure from banks
like Deutsche Bank, JP Morgan, HSBC, and UniCredit, all who have found themselves as targets of regulators due to their business relationship with the Holy See.

REGULATORY NIGHTMARE, BANKING STANDARDS NOT MET

About 32 of the world’s largest financial institutions were “correspondent” banks for the Vatican. They moved about $3 Billion per year from the Vatican Bank to other banks around the globe, allowing the Church to conduct international business. The banks became so fearful of being tarnished by the Vatican that some have even closed down their accounts for the Embassies of the Vatican. HSBC did cease doing business with the Embassy of the Vatican, and other large banks are considering the same. Regulations and oversight around diplomatic bank accounts and PEP’s (politically exposed persons) has become crushing to the banks, and they no longer seek out these customers. Banks have tremendous surveillance around account owned by those who work high up in any government, especially embassy accounts. It is a large cost and risk to the banks, and they loathe doing business with these customers.

In March 2012, JP Morgan closed the bank accounts it held for the Vatican because the documentation provided was not thorough. Vatican was asking JPM to move money all around the world for it via wire transfers but the basic Know Your Customer data could not be obtained. When JPM would say, “we need to answer to the regulators on these wire transactions” the Vatican Bank would push back and say, “We answer to God,” according to a bank
manager at a large European bank.

http://www.bbc.co.uk/news/uk-23565506

http://uk.reuters.com/article/2012/03/19/uk-vatican-bank-idUKBRE82I0P820120319

MONEY FUNNELED TO EFFECT POLITICAL CHANGES, EVADE TAXES

Many bankers, lawyers, and those in business with the Vatican Bank would not speak on record but they did say the Vatican Bank operates unlike any other bank they’ve dealt with. The staff of only 12 were not versed in Due Diligence or KYC (Know Your Customer) standards. There was very little documentation on their cash flows and balances of approximately 19,000 clients. There are 33,000 accounts held
at the Vatican Bank. 50% of clients come from religious orders, 15% are from Holy See institutions, 13% are Cardinals, Bishops, and clergy, 9% are from dioceses around the world. The rest have some affiliation with the Catholic Church. The Vatican Bank doesn’t have many loans, the books contain mostly deposits, wire transfers, and investments.

Many of the deposits are donations and cash tithe. 25% of the bank’s business is done in cash. Laura Pedio, a Milan ani-Mafia prosecutor who specializes in white collar crime, was willing to speak on the record to Financial Times. In her previous cases she found a complex system of proxies, with transaction authorization given to the third parties on behalf of unidentified account holders. The proxy holders had no details
recorded at the bank. Some of the proxies could only be verbally recognized by a few people at the Vatican Bank. She said there was no way to get answers on who these people were, or who was the final beneficiary of the account.

One advisor to the Vatican says the new clampdown by regulators has caused the correspondent banks to toss aside the Vatican and stop doing business with them. “There is a no nonsense approach from the correspondent banks,” the advisor said in an interview. “We are not here to cover the ass of the Vatican.”

The most infamous story so far around the Vatican Bank was their relationship withe a large Italian bank that collapsed. The Vatican Bank was the single largest shareholder in Banco Ambrosiano. After that bank collapsed, it’s chairman was found hanged under London’s Blackfriar’s Bridge. Prosecutors in Rome conclude the bank chairman was killed by the Sicilian Mafia but no charges were brought up against an individual. There have been rumors that the Vatican is a large shareholder of Bank of America but this has not been substantiated.

Mafia victim & bank chairman: Roberto Calvi

Another question is how the Vatican may funnel money into political actions. Pope John Paul II is said to have used the Vatican Bank to channel money to Poland’s Solidarity Movement. Questions arise as to is and how the Vatican may be swaying elections or effecting political change worldwide. Regulators have been cracking down on tax cheats in offshore havens like Switzerland.

FIRST POPE IN 700 YEARS RESIGNED IN FEBRUARY, NEW POPE WITH MAMMOTH PROBLEMS TO FIX

As of March 2013 their new Pope, who is a Jesuit evoking poverty and humility, set a new tone on financial correctness. The new Pope spoke out against the idolatry of money, “all-compassing corruption,” and “Tax evasion that had reached global dimensions.” The new Pope moved his personal residence away from the Apostolic Palace and the Vatican Bank.

The new Pope has issued papal decrees to help speed inspections and make changes to produce real reform in the legal and institutional framework of their banking system.

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Sonya Sandage

Sonya Sandage is a financial industry professional, and has worked for the nation's largest banks and investment wirehouses for 12 years as Private Wealth Manager. Originally from Florida, and a graduate of UF, she now resides in Washington, DC. Her goal is to get more Americans interested and engaged in their nation's governance.
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  • Johhny Appleseed

    We need an attorney general in this country that has a set of balls and that will go after the criminal bankers, not a commy that like to run guns to Mexico. We need to set a precedent in this country by sending these criminal bankers to prison and not giving them small fines which amounts to “Pocket change” to them. You know it’s funny they mention Iceland – did you hear what Iceland is doing for their citizens? If the US had handled things like Iceland did we would not be having half the problems we’re having now. I love the mission of this website and what Mr. Swann does because it strikes at the heart of the tool the criminal globalists and their current stooge administration are tryig to use to cover up the perpetration of their crimes. These same globalist bankers that have temporary gained control of our government are spending billions to control the media and keep that fact and stories like what Iceland did from from the American masses. When stories like that DO happen to get attention from the alternative media they try to use the old Kennedy plan and call them “Conspiracy Theories” and use computerized posting bots hire people (trolls) to post disinformation and perpetrate false views in an effort to sway public opinion. Unfortunately for them it’s not working anymore, and so their next response is and will be to attempt to create a “Police State” atmosphere of fear and control the public debate the same way the old Soviet Union did under Stalin by prosecuting citizen journalists. Unfortunately for them this will not work either. There WILL be a revolution in this country and the globalist bankers and their socialist and liberal “side kick’s” WILL be held accountable for their actions and their crimes of sedition and treason against the American People.

    • Logic

      You’re comment has nothing to do with the story.

      • JGlaze

        Your comment has nothing to do with anything…soooo, you’re dumb.

        • Logic

          My comment has everything to do with the comment above it. I’m sorry you couldn’t grasp that quite simple connection.

          I agree with the premise that banks are essentially evil. However the original comment is just a strangely anti-liberal (since the big banks generally gain more from “conservative” politicians) rant with slightly paranoid overtones that has nothing to do with the article above it, which is about one very specific bank, the religious organization behind it and the investigation thats taking place in ITALY.

          So while I agree with some of his points, although not at all with the way its presented, its entirely irrelevant to the article.

          • JGlaze

            An explanation was all I wanted.

          • Keg

            Did you not read the part where the Vatican is tied to International Banks, like JP Morgan and BofA (both American Banks)? His comment has everything to do with this article, and you are a disinformation troll.

            Away with you!!

          • Logic

            I’m actually just a young man who you apparently disagree with, not a disinformation troll lol. Nothing I’ve said is false or inaccurate so don’t be so quick to throw that buzzword around just because your opinions differ from mine. Besides, I DID say that I agree banks are evil, did I not? I DID say that I agree with some of the points the poster made.

            Your dismissive attitude takes value away from any argument you may want to make and makes you look like some ill informed crack pot.

          • Fast

            BofA started off as The Bank of Italy

          • g.johnon

            what is strange about being anti-liberal?

          • Logic

            Nothing is necessarily strange about being anti-liberal, although I will admit I think there’s a certain close-mindedness and complacency associated with a strict anti-liberal mindset. By definition conservative politics lends itself to the status quo or past ideas while liberal attitudes support change and (ugh this word) progress, albeit not necessarily successfully or correctly. I want to stress I’m not advocating for liberal policies here, just talking about the the idea that our political systems shouldn’t be considered sacred and perfected and we should constantly be looking for ways to improve.

            But what I was pointing out as strange was the way the commenters anti-liberal bias leaked out in an illogical fashion, specifically “the banks and their socialist and liberal sidekicks”.

            In reality, where we all reside, banks generally have more allies among Conservative politicians and are more aligned with Conservative politics. That said, yes, our current American administration is most certainly playing for the banks. But so was Bush and friends. So are the Republicans. By singling out “liberals” alone we are falling into the “us vs. them” dichotomy designed to keep us in conflict rather than aimed at our true enemies.

          • g.johnon

            well, as you yourself just pointed out, banks are generally more allied to the right than the left. the commenter said globalist banks AND their socialist and liberal sidekicks.
            I did not read that as singling out liberals so much as putting right and left together as co-actors in crime.
            I am an independent, an equal opportunity basher when it comes to the two parties. so, it is possible that my own bias against the system came into play here.

          • Logic1

            Oh I see what you’re getting at. Seems like we’re coming from similar places just interpreting his comments a little differently.

          • g.johnon

            so it would appear.

          • RElgin

            The idea that there is a “conservative” or “liberal” bias is a red herring in itself because this sort of crime is about money and its control, which does not distinguish between political viewpoints. It is all about the money and the motivation to get it any way possible.

            That the Catholic Church itself has a problem with “mammon” is not good news at all.

          • g.johnon

            it is not news at all. Rothschild took over the Vatican bank in 1824.

      • vongoh

        No, honestly I don’t know who the guy is either. But I like him!

    • JGlaze

      I’m with you 100%. They’ve also come to realize what a valuable tool the Internet is for the average citizen and will try to cut off access to it (net neutrality). The people are catching on and the globalists will pay in more ways than just with their checkbook.

  • Qari

    Sometimes, I get a sense that this place is libertarian, and sometimes, I get the feeling this place is statist. Who the hell cares what people do with their money if it’s people give it to them without the threat of using guns? Who cares about this regulation or that regulation?

    • Jesse Farmer

      Lol. What?

    • Keg

      When regulations affect one group positively and negatively affect another, it is a big deal.

  • James Hale

    I’m an atheist but I have to admit that it’s refreshing to witness the selfless reforms being brought about by the new Pope. There aren’t many in power like him so I hope he serves for a long time to come.

    • R4F1

      Actually, what i thought was positive reforms by the Pope intially, is slowly turning into something else entirely. His anti-capitalist rhetoric on one hand, and his recognition and praising of Israelis as the “children of God” is rather disturbing. He seems like a left-progressive plant than someone standing for Catholic interests.

  • Patrick Donoahue

    If the Sicilian mafia say they will kill your entire family if you do not co-operate and you know the police can’t protect you, what would you do? One of your choices would be to play along and maybe even take a cut of the action. The other is to watch your family slaughtered like pigs. Choose.

  • geno

    $24 mil is pennies compared to the crimes that JPM and HSBC commit on a yearly basis… Note: LIBOR, London Whale, mortgage crisis, Euribor, laundering for Mexican cartels… Funny, the author failed to acknowledge these crimes, while singling out the Vatican bank as criminal… Ben Swann needs to better vet these articles and the “financial professional” authors writing them

    • Jesse Farmer

      Ben Swann hires writers that will produce this crap. It the whole point of Ben Swann. He’s an unabashed servant of the bankers that the Pope is opposing.

      You can see that in every article on benswann.com. Could be bs.com.

    • Logic

      This is still a story worthy of an article…

      And why would the author acknowledge those other crimes? Thats not what the article is about. There are plenty of news articles out there about those very topics.

  • Jesse Farmer

    7 Billion is a banking empire? Not in our world. If JP Morgan and the real banking oligarchs of this world don’t want to do business with the Catholic Church, then I do.

  • The-Return-of-Odyssey

    To those who always blame the Vatican for something, let me ask you, do you not believe that Churches can get corrupted?

    It certainly was the case in the Vatican, and also the Lutheran church due to hearsay teachings such as the scofield bible. They have had a lot of corruption in the last years, sneak into the pulpit. Yet it would be wise to remember, it was Jacob Frank and some of his jesuitical agents of hearsay who corrupted the Church. Before them usury sought banking was not allowed. These Globalist thieves did invoke much evil in these Churches and schools, need one be reminded of their pact with Rothschild. Let us pray for an end of this apostasy ushered in under Pope Francis and Pastor Joel Osteen with these reforms.

    • Logic1

      I think people know Churches can get corrupted and thats exactly the reason they blame the Vatican for the shady things it does.

  • Big Ben

    there are rumors that the Vatican is using funds to sway political elections? So glad the US federal government is so far above this nonsense…

  • Zackss

    Deutsche Bank, JP Morgan, HSBC want transparency in the Vatican bank so regulators don’t come knocking on their doors. Google “The Red Button” by Catherine Austin Fitts and listen to how US based Banks launder up to $1000B/yr in drug money. A case of calling the kettle black?

  • lucyroyalhighness

    Does this article sound like a lot of hearsay and rumors to anyone else? The author mentions nothing specific, no names, no dates. Plus the banks and corporations that are worth much much more than the “vatican bank” are the ones pulling political strings and laundering money without check. If they don’t want to deal with the vatican bank that hardly reflects anything negative about them. Perhaps only the opposite.

  • Sustainable Lifestyle

    Only put checks in the collection basket.

  • Linda Gonzales

    This Friday is the 13th, ouh ouh :-(

  • Vanessa Aldeberon

    oh wake up already. every living embodiment is ‘registered’ to the Vatican (Crown) via their birth certificates. Every single tax dollar collected from every single person ONLY goes to pay off the interest from previous loans. That is IT. NONE of your money goes to pay for programs or snow removal or to pay for the welfare prone like you all like to bitch about. It goes to the Crown. You all are paying off a loan that funded the 1812 war. And guess what? Your great great grandkids will STILL be paying off the interest on that ONE LOAN. And Friday the 13th Linda is a bad day because it’s the day the corupt catholic church ordered the hunting down and buthering of any person who was not following what they said like little sheep. That is how ‘friday the 13th’ started.

    • Logic1

      Hey let’s make up fantasies instead of addressing the very real political, social and economic problems we face.

      You are severely misinformed.

  • Private Free American

    I don’t know about this church or its bank, but KYC “Know Your Customer” sounds like something inherently invasive of privacy and therefore freedom. In order to enslave a people, you need to identify them like cattle and then manage what they can and cannot do with what they have. A free people should be able to find a bank or any other business willing to do business with them without all of this invasive spying network in place ready to fall into the wrong hands. It’s also a bad sign that we see more and more when supermarkets charge higher prices to people who prefer to keep their privacy. What has happened to our people and their love for freedom?

    • Logic1

      You have absolutely no idea what you’re talking about.

      “Know Your Customer” policies are just designed to deter fraud and mitigate financial losses to the bank.

      It SOUNDS like something inherently invasive of privacy because you are a paranoid loon. If you’re don’t want to give a bank personal information then thats your business, but they’re not going to do business with you because they’re not going to risk losing money to provide some random a service.

  • kev in AB

    HSBC refused to do business with the church? Right after they were found to be laundering hundreds of millions for drug cartels? Such high morals…

  • pcHawk

    Wakeup people this bankd and JPM, HSBC all have incremnidating hitory now they are acting like they have morals too lol

  • Drturi DrTuri
  • Karolyn

    There has been criminal activity by the Vatican’s band from many years ago; even during Hitler’s reign. I believe this comes out in the book called “Family of Secrets: The Bush Dynasty”. It’s a long book but information was deeply investigated and very informative.

  • Edward Wilcock

    Banking Crime and Child Molestation by Priests in God’s Backyard – The Church – is surely not
    an Act of God. If it is, God is the Devil.

    .