Vatican Bank to Crack Down on Unsuitable Clients

The Vatican bank said Wednesday it is cracking down on unsuitable clients, a day after fresh charges were laid against a former accountant at the scandal-hit financial institution.

The bank, officially known as the Institute of Religious Works (IOR), said it had screened 55 percent of its customers -- some 10,000 client records -- by the end of 2013 as part of a mammoth anti-money laundering clean-up operation.

It has conducted an "externally assisted forensic transaction review" into "unusual transactions", the findings of which are "delivered to the board and to Vatican supervising and law enforcement authorities as appropriate".

The criteria for opening an account have been tightened, and customers must now be Catholic institutions, clerics, employees or former employees at the Vatican, or embassies and diplomats accredited to the Holy See.

Accounts held by others "are being terminated," the bank said.

Screening of accounts is expected to take until mid 2014, "and will be subject to an assessment in the course of a forthcoming inspection by the AIF" -- the Vatican's financial authority -- it said.

In a review of the Vatican's efforts last month, the Council of Europe urged the Holy See's financial watchdog agency to carry out an on-site inspection of the scandal-hit institution.

The bank said it hoped its progress would convince Italy to resume banking relations frozen in 2010 amid an investigation into money laundering.

"The IOR looks forward to a resumption of full interaction with Italian financial institutions pending review by Italian regulatory authorities of the Holy See / Vatican City State's anti-money laundering provisions," it said.

The bank's progress report was released a day after a former Vatican accountant -- already under house arrest and on trial for alleged corruption and attempted money laundering -- was notified of fresh charges against him.

Italy's financial police said Tuesday that they had seized Monsignor Nunzio Scarano's luxury 17-room apartment and blocked nearly 9.0 million euros ($12 million) on current accounts linked to the senior Italian cleric.

The IOR said Wednesday it had "commissioned a detailed internal investigation" into the affair when the scandal broke last year, and Scarano's accounts "have been frozen since July 2013", it said.