Pope Francis strengthens Vatican Bank supervision

Pope Francis has strengthened the monitoring of the Vatican bank to prevent money laundering or the financing of terrorism as part of his campaign to clean it up after decades of scandal.

Issuing a "Motu Proprio" - a decree at his own initiative, Francis said the Vatican's internal watchdog, the Financial Information Authority (FIA), would have increased powers of supervision over the bank and other Holy See departments involved in financial activities.

The move will lead to closer monitoring of the Institute for Works of Religion (IOR) - the formal name of the Vatican bank - and responds to a recommendation from the European anti-money laundering committee Moneyval last year.

The Vatican is trying to meet international standards on fighting crimes such as money laundering, funding of terrorism and proliferation of weapons of mass destruction. Moneyval said in a July 2012 report that the Vatican still had some way to go.

It said FIA's powers should include reviewing policies, procedures, accounts and records and that it should have the right to enter Vatican premises and demand access to information.

Francis's decree broadens the application of relevant Vatican laws to the departments of the Roman Curia, or central administration, and to other institutions dependent on the Holy See as well as non-profit organisations based in Vatican City.

In 2010, Rome magistrates froze 23 million euros (19.6 million pounds) held by the IOR in an Italian bank. The Vatican said its bank was merely transferring funds between its own accounts in Italy and Germany. The funds were released in 2011 but the money laundering investigation continues.

Last month the FIA signed a memorandum of understanding with Italian authorities over the exchange of financial and bank information as part of efforts to combat money laundering in line with international standards.