Financial Transparency Coalition

In its list of Most Influential People this year, TIME magazine called Pope Francis a “moral leader in word and deed.” In the commentary on this accolade, President Obama said this of the pope: “His Holiness has moved us with his message of inclusion, especially for the poor, the marginalized and the outcast. But it has been his deeds, his bearing, the gestures at once simple and profound — embracing the sick, ministering to the homeless, washing the feet of young prisoners — that have inspired us all.”

When it comes to poverty and inequality, Pope Francis has truly been both a champion and a moral leader. The pope does not just speak about the injustice of inequality, the travesty of poverty, or the moral imperative to bring economic development and inclusion to the developing world. Over his lifetime, he has emphatically observed these values in his own life, forsaking many of the luxuries typically afforded to men in his positions. He has also consistently urged Christians and Priests to do the same; that is, to practice what you preach.

By extension, we might expect that the bishop of Rome should govern his state, Vatican City, in a way that is consistent with these principles. With Pope Francis’ record in mind—and understanding the deep connection between financial transparency and poverty worldwide—we might expect that the Vatican should be a beacon of transparency in an otherwise opaque world.

In fact this is not the case. As such, it remains one area of poverty where the pope remains reactive, rather than proactive.

The financial system—both politically and practically—in the Vatican City is unusual to say the least. The primary financial institution in the Vatican City is the Institute for Works of Religion (IOR), also known as Vatican Bank. It is directed by a private CEO, but he reports to a committee of cardinals and, ultimately, to the pope.

For decades IOR has experienced regular corruption scandals and has been connected to and involved in cases of money laundering, tax evasion, and other suspicious financial activities. IOR and two of its high level officials also faced money laundering allegations in 2009 and 2010 when Italian authorities discovered several suspicious transactions. In another recent case, financial police in Sicily revealed that a Roman Catholic priest living in Rome, whose uncle was convicted of Mafia association, used a Vatican Bank account for money laundering.  According to investigators, the priest’s father illegally obtained $350,000 dollars from the regional government of Sicily for a non-existent fish breeding company and then transmitted the funds to his son as a “charitable donation.”

Pope Francis has shown a clear intention to clean up this financial grime. Vatican Bank now has a commission to brief the pontiff on the bank’s operations and ensure it adheres to the Church’s mission. Last year, Pope Francis issued new regulations for IOR on financial transparency. The Vatican’s Pontifical Commission also passed laws designed to bring the Bank into compliance with international anti-money laundering laws and to prevent terrorist financing. Since last year, bank officials have closed 3,000 suspect accounts.

Cardinal Pell, the current Prefect of the Secretariat for the Economy, noted that these reforms reflect an ambition to “to become something of a model for financial management rather than a cause for occasional scandal.”

Indeed, this is the right way to think about it. As a moral leader, in words and deeds, Pope Francis has a duty to serve as this example. It is heartening to see that the Vatican has shown clear initiative and intention toward reform. We can only hope that in the end these reforms are not merely reactive to avoid scandal, but will one day actually prove meaningful enough to make the Vatican Bank a moral leader in transparency.