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Carmelo Barbagallo, President of ASIF Carmelo Barbagallo, President of ASIF 

Barbagallo: ‘Here’s how we are strengthening ASIF’

The President of the Vatican’s Supervisory and Financial Information Authority retraces the steps taken to conform to top international standards in the fight against money laundering, and says the Authority will be empowered thanks to the arrival of a new Director.

By Vatican News

"In a time such as the current one, ethical tension is a top priority, and this is precisely the direction that has always distinguished the action of the Holy See. This is why we have strengthened our Authority."

Speaking to Vatican News, Carmelo Barbagallo talks about the steps taken to update the Vatican’s financial watchdog agency and keep abreast of the highest international standards. 

Barbagallo is the President of the Supervisory and Financial Authority (ASIF), tasked with the regulation, oversight and supervision of entities of the Holy See and Vatican City State to combat money laundering and the financing of terrorism and for financial information. 

In an address during the closing session of the 5th edition of an Anti-Corruption Masters course at Rome’s University of Tor Vergata, Barbagallo described the reforms in Vatican finance institutions and the recent history that led to their establishment.

Q: President Barbagallo, what are we talking about when we use the expression "Vatican finance"?

First of all, we need to make clear that no private economic activity is permitted in Vatican City State, nor is the private exercise of professional activities. The sale of any kind of goods is entrusted to the State under a monopoly regime. The IOR is the only financial intermediary authorized to operate. The administration of the Holy See's assets, both regarding private property and real estate, is administered by a specific entity: APSA, which acts as the State Treasurer. In the Vatican, which is the smallest state in the world, the money supply in circulation is minimal, as is economic and financial interchange with foreign countries. 

Q: By its very nature, however, the Vatican is a crossroads of financial flows from the world and for the world...

Certainly, and this happens in virtue of the universal reach of the Catholic Church. This is another reason why, despite the small dimension of its economy and finance, it was deemed appropriate that the Vatican equip itself with structures and rules of control on a par with international best-practices.

Q: When did this process begin?

Vatican City State adopted the euro back in 2001, and then in 2009 it signed the Monetary Agreement with the European Union. Since 2010 it has consistently introduced regulations aimed at preventing money laundering, fraud and counterfeiting. It was with these norms that the first Holy See Authority for Financial Control (FIA) came into being. In the following years, the Vatican jurisdiction became part of the Moneyval Committee of the Council of Europe (2012) and AIF was admitted to the Egmont circuit (2013). 

Q: Why was it important to adhere to Moneyval and Egmont?

These are very significant choices. Moneyval, operating within the Council of Europe in the form of a Committee made up of more than thirty countries, evaluates - and, in a sense, certifies - compliance with international Financial Action Task Force (FATF) standards for preventing and combating money laundering and the financing of terrorism. Egmont is a global forum of Financial Intelligence Units (UIF) from over 160 countries that share best practices for international cooperation and exchange of financial intelligence information, to combat money laundering and terrorist financing.

Q: What influence has Moneyval had on subsequent reform developments?

It was also in response to the recommendations received from Moneyval that the Vatican's legal system underwent important changes in 2013 with the approval of Law XVIII, which represents the first organic law on the prevention and countering of money laundering and terrorist financing and the prudential supervision of entities that carry out professional activities of a financial nature. The changes introduced range from the fine-tuning of risk assessment mechanisms and the exchange of information in financial matters to the extension of a system of sanctions and supervision. In particular, Law XVIII established a "pluralistic" system of competent authorities, entrusting the Secretariat of State with general policies and strategies, the Governorate with important administrative and sanctioning tasks, the Gendarmerie and the Promoter of Justice with specific investigation and prosecution responsibilities. The Financial Security Committee (CoSiFi), was created with the task, amongst others, of coordinating the competent authorities in the field of preventing and combating money laundering. FIA was given prudential supervisory powers concerning IOR, and the boundaries of those obliged to identify and report suspicious transactions to FIA has been broadened considerably, extending to public authorities. More recently, non-profit organizations and other legal persons have also been requested to refer to FIA, resulting in the supervision of over a hundred legal entities. The Vatican's financial reform took a further step forward in 2014, with the creation of three new bodies, all assigned with different roles, of financial control: the Council for the Economy, the Secretariat for the Economy and the Office of the Auditor-General. 

Q: Can you describe the steps taken in the last seven years?

There has been a consolidation of this structure, aimed at increasing financial transparency and ever tighter control, also through intensified cooperation between the Vatican authorities, sanctioned by a special memorandum. In this context of growing transparency and increasingly sharp controls, it is worth noting the new regulation of public contracts, also known as the "Procurement Code" that was promulgated last year. This aims to ensure the sustainable use of Vatican funds through a unified management system that is planned and informed by criteria of maximum transparency and competition, to protect the jurisdiction from illicit agreements and corruption. Finally, also in 2020, the FIA Statute was amended, changing its name to ASIF (Supervisory and Financial Information Authority), emphasizing the importance of its regulatory and supervisory functions. The new Statute streamlined and strengthened ASIF's governance and completed its organization by establishing a specially dedicated Regulatory Office.  

 

Q: What are the results of the process you have described so far?

I believe it is possible to state, in extreme synthesis, that the rules and structures that govern the economic and financial order in the Vatican - inspired by the principles of balance of power and plurality of control - are those that are both necessary and sufficient, to strengthen the exercise of the Church's mission in a condition of greater protection within the current globalized context. In this regard, while awaiting the annual Moneyval audit, we continue to work hard. In a period in which, to counteract an increase in poverty and the need to restart the engine of economic recovery, the financial support of States could lead to an increase of circulation of liquidity and, at the same time, a weakening of the 'defences' against potential risks of corruption and money laundering. Thus, entities and persons in charge of public control are called to monitor and supervise with the utmost attention, and ethical tension must always be high. This is the exact direction in which ASIF is working, strengthening its vigilance office with the arrival of a new director. 

20 March 2021, 11:00