FATF AML Deficiency List
US Dept of State Money Laundering assessmentNon - Compliance with FATF MER Recommendations
The Vatican City is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in the Vatican City was undertaken in 2021. According to that Evaluation, the Vatican City was deemed Compliant for 4 and Largely Compliant for 28 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 5 of the Effectiveness & Technical Compliance ratings.
US Department of State Money Laundering assessment (INCSR)
The Vatican City was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
The Holy See is an atypical government, being simultaneously the supreme government body of the Catholic Church and a sovereign entity under international law. It operates from Vatican City State, a 0.44 square kilometer (0.17 square mile) territory created to provide a territorial basis for the Holy See. The Institute for Works of Religion (IOR) performs functions similar to those of a bank, so the IOR is commonly referred to as the “Vatican Bank.” However, unlike a normal bank, the IOR does not loan money, its accounts do not collect interest, and the IOR does not make a profit for shareholders or owners. Rather, the IOR acts as a clearinghouse for Vatican accounts, moving funds from Catholic Church sources to Catholic Church destinations. Approximately 15,000 customers have accounts in the IOR; most of the clients are religious orders, Vatican employees, and clergy, including bishops.
There is virtually no market for illicit or smuggled goods in Vatican City, and there are no indications that trade or drug-based money laundering occurs in the jurisdiction. There are no indications of any ties to terrorism financing activity. The population of Vatican City, around 800, consists almost entirely of clergy (Holy See officials), the Swiss Guard, and members of religious orders.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index N/A
World Governance Indicator – Control of Corruption 74
The Holy See is supported financially by a variety of sources, including investments, real estate income, and donations from Catholic individuals, dioceses, and institutions; these help fund the Roman Curia (Vatican bureaucracy), diplomatic missions, and media outlets. Moreover, an annual collection taken up in dioceses and from direct donations go to a non-budgetary fund, known as Peter's Pence, which is used directly by the pope for charity, disaster relief, and aid to churches in developing nations. Donations increased between 2010 and 2011.
The separate Vatican City State budget includes the Vatican museums and post office and is supported financially by the sale of stamps, coins, medals, and tourist mementos; by fees for admission to museums; and by publication sales. Its revenues increased between 2010 and 2011 because of expanded opening hours and a growing number of visitors. However, the Holy See has not escaped the financial difficulties engulfing other European countries; in 2012, it started a spending review to determine where to cut costs to reverse its 2011 budget deficit of $20 million. The Holy See generated a modest surplus in 2012 before recording a $32 million deficit in 2013, driven primarily by the decreasing value of gold. Most public expenditures go to wages and other personnel costs; the incomes and living standards of lay workers are comparable to those of counterparts who work in the city of Rome. In February 2014, Pope FRANCIS created the Secretariat of the Economy to oversee financial and administrative operations of the Holy See, part of a broader campaign to reform the Holy See’s finances.
printing; production of coins, medals, postage stamps; mosaics, staff uniforms; worldwide banking and financial activities
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