VATICAN CITY – Pope Benedict XVI has instituted a new agency to monitor all Vatican financial operations and make sure they meet international norms against money-laundering and the financing of terrorism.

The pope issued an apostolic letter on Dec 30 that established the Financial Information Authority as an independent agency to oversee the monetary and commercial activities of all Vatican-related institutions, including the Vatican bank.

At the same time, the Vatican promulgated a detailed new law that defined financial crimes and established penalties – including possible jail time – for their violation. The list of transgressions includes corruption, market manipulation, fraud and virtually any activity that facilitates or provides funding to acts of terrorism.

The new law, which reflects the latest European Union regulations, takes effect on April 1.

The pope’s apostolic letter said the Vatican fully supported the international community’s efforts to coordinate a response to financial crimes, which often involve more than one country.

The creation of such an oversight agency is unprecedented at the Vatican, where several departments have operated with some degree of financial independence for decades or centuries.

The move came several months after Italian treasury police, in a money-laundering probe, seized 23 million euros (S$39 million) that the Vatican bank had deposited in a Rome bank account. The Vatican criticised the confiscation, saying the deposit was legitimate and that the Vatican bank was committed to “full transparency” in its operations.

The Vatican has been working for some time with Italian and international authorities to comply with procedures that ensure funds are not used for terrorism or money-laundering. The new documents represent the fruit of those efforts.

In addition, the Vatican announced three new laws aimed at curbing the counterfeiting of euros and currency fraud.

The Financial Information Authority will operate with full autonomy and monitor all Vatican agencies that have financial dealings or commercial transactions. n CNS