René Brülhart left the board of Hypothekarbank Lenzburg AG at the end of last week for "personal reasons." He is currently on trial in Vatican City for abuse of office during his tenure as president of the Financial Information Authority.

"For private reasons, René Brülhart has decided to step down from the Board of Directors of Hypothekarbank Lenzburg AG with immediate effect," according to statement released by the bank Aug. 19.

"The Board of Directors respects his personal decision and thanks him for the trusting and competent cooperation. Hypothekarbank Lenzburg AG regrets his resignation and wishes René Brülhart all the best for the future."

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Barbagallo, 63 is an auditor and Italian banking consultant in the areas of banking, financial supervision and Single Supervisory Mechanism.

Previously he was head of the banking and financial supervision department of the Bank of Italy.

"I am honoured to have received this appointment, aware of the full weight of the moral and professional responsibility it carries," Barbagallo told Vatican News.

The move came amid several events:

• On October 1, Vatican gendarmes raided the offices of the Secretariat of State and AIF after the Vatican Bank considered "suspicious", a €100m loan to finance a loan on a property in London's upmarket Chelsea neighbourhood.
• The Vatican suspended five employees including the AIF's number two official, Tommaso Di Ruzza.
• AIF president Rene Brülhart released a statement expressing full faith in Di Ruzza.
• Brülhart unexpectedly resigned.
• Since Brülhart's resignation, Marc Odendall, a retired Swiss-German banker also tendered his resignation from the AIF Board saying there's no point in staying on the board of an empty shell.
• The Egmont Group, a Toronto-based network of more than 160 national financial intelligence units around the world suspended the Vatican from access to its information because the Vatican represented a security threat.

Barbagallo says he will bring all of his 40 years experience to his new position.

Adding, "the AIF will be able to give its own contribution in its role as a supervisory authority, so that the fundamental values of fairness and transparency of all the financial movements in which the Holy See is engaged may continue to be affirmed and recognized".

"I intend to reassure the international system of financial information that all cooperation will be given in full respect of the best international standards," he said.

On the plane home from Thailand and Japan, Pope Francis expressed confidence in the Vatican's financial reforms.

Saying the questions about Vatican finances are serious, especially those involving the London real estate deal, but he is of the view that the reforms begun by Pope Benedict XVI are working.

"This is the first time the lids have been taken off the pots by someone inside and not outside", he said.

Sources

• CathNews
• WSJ
• WSJ
• CNA

Announcing René Brülhart's replacement, the Vatican said Pope Francis has chosen a new president but does not name him or her.

The three-sentence announcement said Francis thanked Brülhart for his work as his term ended and would soon name "an individual with a high professional profile and competence at the international level."

Brülhart said he had decided to resign at the end of his five-year term, which ends on November 19.

However, according to John Allen of Crux, the president of the Financial Information Authority (AIF) has no fixed term of office, "To assert that it's the end of a non-existent "mandate" is prima facie dubious", comments Allen.

The main purpose of the financial watchdog is to prevent financial crimes at the Vatican and oversee the cleanup of the Vatican Bank.

Brülhart, a highly respected Vatican figure in the international financial community, is a former director of Liechtenstein's financial intelligence unit, where he helped end the country's reputation as a financial pariah.

A former vice-chair of the Egmont group, a global network of financial intelligence units, the Swiss lawyer, dubbed by some as the 007 of anti-money laundering efforts.

Since Brülhart's involvement at AIF, the Vatican notched a string of impressive successes, including

• the Moneyval process,
• membership of the Egmont group which groups financial information agencies from 130 countries to share information in the global fight against money laundering and terror financing,
• the MOUs signed with various countries, and, most recently,
• the Vatican's entry into the Single Euro Payments Area (SEPA), which allows the Vatican bank to have its own IBAN code to facilitate wire transfers.

Since Brülhart's resignation, Marc Odendall, a retired Swiss-German banker also tendered his resignation from the AIF.

Odendall said Brülhart's resignation and the Egmont Group removing the AIF from its communications network made his involvement pointless.

"We cannot access information and we cannot share information.

"There is no point in staying on the board of an empty shell," Odendall told the Associated Press, Tuesday.

AIF remains an Egmont member but is suspended from the secure communications network.

"Today it's difficult to resist the sense that Rome is headed back to the future, meaning a situation in which financial management is lodged with a largely Italian nexus of clerics and lay financiers, and where power dynamics have at least as much impact on outcomes as financial norms and best practices.

"Perhaps it's unreasonable to expect the Vatican's communications team to put all that in a statement, at least quite so bluntly. Just don't try to tell us there's nothing to see here, when the eye test reveals something else indeed," writes John Allen.

Police raid

In October Vatican police raided the offices of the AIF and Secretariat of State, the Holy See's executive.

The raid was part of an investigation into a large property investment in London.

The Vatican's secretariat of state had put 150 million euros into the luxury apartment building in London's tony Chelsea neighbourhood, only to see tens of millions end up in the pockets of middlemen who were managing the venture.

In 2018 the secretariat of state decided to buy the building outright while working with British authorities to nab the middlemen.

However internally, the Vatican bank and auditor general's office raised an alarm with Vatican prosecutors that the buyout looked suspicious, sparking the raids on AIF and the secretariat of state.

Since the raid, the AIF's security chief resigned and the Vatican has suspended five employees, including the AIF's deputy, Tommaso Di Ruzza.

It is unclear what the suspended employees are suspected of doing.

The saga over the Vatican's financial control comes as early next year it is expecting a review by the Council of Europe's Moneyval committee.

Moneyval measures compliance with international standards against money laundering and financing of terrorism.

Sources

• Wall St Journal
• NCR
• Crux
• Associated Press
• Crux

And even more unusual when the official is a layman.

After beginning with a joke that the Vatican had rather more thick walls and fewer windows than the glass-and-steel Blavatbik School of Government — "but still we hope we are introducing transparency in our own way" — René Brülhart asked the students and professors to observe a moment's silence for his predecessor as head of the Vatican's financial watchdog, Cardinal Attilio Nicora, who died earlier this week.

The Swiss regulator, president since 2012 of the Vatican Information Authority (AIF), has had remarkable success in creating and implementing new laws and regulations to prevent Rome's finances ever again exploding in scandals.

After seeing him talk to students of change management, I think I know why.

The auditor — who came to the Vatican after a remarkable success in clearing up that other traditional European money-laundering center, Lichtenstein — is an instrument of reform and change.

He should be a major threat to the Vatican old guard, always suspicious of outside experts who think they know best.

Yet that gesture towards his predecessor shows his sensitivity towards the culture of the curia.

Many of the questions from the audience, predictably, were inviting him to share stories of the tensions involved, but he never criticized anyone.

He had been given a warm welcome, he said ("walls may be thicker, but people in the Vatican are very warm-hearted"), there was a "big curiosity to learn and understand," and he was only able to introduce change because of the huge backing from the top he had received.

Brülhart has succeeded in the Vatican in large part because of his sensitivity to its singularity as both a sovereign and global institution. Rather than aggressive talk of "modernizing" the Vatican, Brülhart has sought to create a "tailor-made" system of regulation — a term he used often in his talk — that brings the Vatican into line with contemporary European standards but without sacrificing its uniqueness. Continue reading

Source and Image:

• Crux article by Austin Ivereigh, contributing editor at Crux

Two of those cases were forwarded to Vatican prosecutors for further investigation, and the other four may still warrant more formal probes, the Financial Information Agency said in its first annual report.

In the previous year only one suspicious transaction was reported, which FIA director Rene Brulhart said proves that his department and its system, which became operational in April 2011, are working well.

Brulhart said the six suspicious transactions involved sums of money greater than 10,000 Euros ($NZ15,775) but would not provide additional details.

"I'm not saying that everything is great and perfect, but that a lot of progress has been made in the last two years," said Brulhart, a Swiss lawyer and anti-laundering expert.

"It's important that we're setting a system here to protect the Holy See," he added.

He pointed to co-operation with Vatican police and Italian forces, thorough screening of financial transfers, and the signing of co-operative agreements with European countries to govern banking and financial transactions.

The FIA was established in 2010 to tighten controls on Vatican financial transactions, in response to complaints that the Vatican — and especially the Vatican Bank — could be vulnerable to exploitation by money-laundering operations.

Brulhart said the FIA would soon put into place new procedures to screen account holders at the Vatican Bank, officially known as the Institute for Works of Religion or IOR.

As he presented the FIA report, Brulhart reminded journalists that the IOR is not an ordinary bank.

"The IOR is not a commercial bank, and the Vatican is not a tax haven," he said. "The Holy See is a reliable partner in the international fight against money laundering."

Sources:

Catholic News Agency

Reuters

Vatican Radio

Image: Catholic News Agency

SPIEGEL: Mr. Brülhart, are you partly responsible for Pope Benedict XVI's resignation?

Brülhart: That does not fall within my area of responsibility. Why do you ask?

SPIEGEL: The first resignation of a pope in centuries has sparked widespread speculation. For instance, there is conjecture that the pope had to resign because he pushed for more transparency at the Institute for Works of Religion (IOR), commonly known as the Vatican Bank, and strove to clear it of all suspicions of money laundering. That is your job.

Brülhart: Let's allow conspiracy theories to simply remain conspiracy theories. Only the Holy Father emeritus knows the ultimate reasons for his resignation. It has nothing to do with my work.

SPIEGEL: Since September 2012, it has been your job to step up the fight against money laundering and remove vulnerabilities in the Vatican's financial system. How much of a willingness to make reforms actually exists?

Brülhart: Back in 2010, Pope Benedict XVI moved to combat money laundering and founded the Financial Information Authority (FIA). The first anti-money laundering law was introduced in 2011, and this legislation was further tightened a few months later. The Vatican has submitted to an audit by the European Council's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL). The Church intends to apply international standards.

SPIEGEL: The MONEYVAL report from the summer of 2011 certifies that the Vatican has made progress, but it still lists serious shortcomings, such as a lack of independence and the insufficient monitoring abilities of your supervisory authority.

Brülhart: We don't live in a world where everything is perfect at the push of a button. The report was an objective appraisal of the situation. We have made great efforts since then, and we shall continue to do so. The next step will involve bolstering the legal framework of the monitoring system within the IOR area of supervision, as stipulated. Continue reading

Sources

• Spiegel Online
• Image: The New York Times