Exclusive: Vatican inspectors suspect key office was used for money laundering

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VATICAN CITY (Reuters) -- Vatican financial investigators suspect a department of the Holy See which oversees real estate and investments was used in the past for possible money laundering, insider trading and market manipulation, according to a report seen by Reuters.

The information in the confidential document, which covers the period from 2000 to 2011, has been passed on to Italian and Swiss investigators for their checks because some activity tied to the accounts allegedly took place in these countries, a senior Vatican source said.

SEE ALSO: Vatican arrests 2 people in latest probe of leaked documents

While most of the media focus of the Vatican's murky finances has for decades centered on its official bank, the Institute for Works of Religion (IOR), a department called the Administration of the Patrimony of the Holy See (APSA), acted as its own financial powerhouse.

APSA, a sort of general accounting office, manages the Vatican's real estate holdings in Rome and elsewhere in Italy, pays salaries of Vatican employees, and acts as a purchasing office and human resources department.

One of its two divisions also manages the Vatican's financial and stock portfolio. The 33-page report suspects this division was used by an outsider for non-Vatican business, with possible complicity of APSA staff, in violation of its own regulations.

The internal investigation is part of a drive by Pope Francis to give Vatican financial authorities free rein to dig deep, over-ruling some cardinals who would prefer to forget the past now that the Vatican has enacted major reforms and instituted controls to thwart irregular practices.

Under Francis, the Vatican has overhauled its scandal-plagued bank, given more power to its Financial Intelligence Authority, appointed its first auditor-general and set up a new ministry to oversee economic activities of all departments, which previously ran their budgets with little or no control.

It is not clear whether this will be enough to bring full financial transparency to the traditionally secretive Vatican.

See photos of Pope Francis's visit to the United States:

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Pope's visit to the U.S. (Washington DC, New York, Philadelphia)
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Exclusive: Vatican inspectors suspect key office was used for money laundering
Pope Francis reaches out to 5th grader Omodele Ojo, of the Brooklyn borough of New York, as he is greeted while arriving at John F. Kennedy International Airport Thursday, Sept. 24, 2015, in New York. (AP Photo/Craig Ruttle, Pool)
Pope Francis waves from his car, a Fiat 500, after arriving at Andrews Air Force Base, Md., Tuesday, Sept. 22, 2015. The Pope is spending three days in Washington before heading to New York and Philadelphia. This is the Pope's first visit to the United States. (AP Photo/Susan Walsh)
Pope Francis, left, walks with President Barack Obama, right, after arriving at Andrews Air Force Base, Md., Tuesday, Sept. 22, 2015. The Pope is spending three days in Washington before heading to New York and Philadelphia. This is the Pope's first visit to the United States. (AP Photo/Susan Walsh)
Pope Francis waves from a Fiat 500 as his motorcade departs from Andrews Air Force Base, Md., Tuesday, Sept. 22, 2015, where President and Mrs. Obama welcomed him. (AP Photo/Andrew Harnik)
President Barack Obama and Pope Francis walk down the Colonnade before meeting in the Oval Office of the White House in Washington, Wednesday, Sept. 23, 2015. (AP Photo/Andrew Harnik)
President Barack Obama, first lady Michelle Obama and Pope Francis wave to the crowd on the South Lawn from the Truman Balcony of the White House in Washington, Wednesday, Sept. 23, 2015, during a state arrival ceremony. (AP Photo/Pablo Martinez Monsivais)
President Barack Obama talks with Pope Francis in the Oval Office of the White House in Washington, Wednesday, Sept. 23, 2015. (Tony Gentile/Pool Photo via AP)
Pope Francis give the thumbs-up from the popemobile during a parade around the Ellipse near the White House in Washington, Wednesday, Sept. 23, 2015. (AP Photo/Carolyn Kaster)
ADDS NAME OF GIRL - Pope Francis reaches to give a blessing to Sophie Cruz, 5, from suburban Los Angeles, during a parade in Washington, Wednesday, Sept. 23, 2015. She also delivered a bright yellow T-shirt and a letter expressing wishes that her mother and father and millions of others who are in the U.S. illegally are allowed to remain in the country. (AP Photo/Alex Brandon, Pool)
Seminarians greet Pope Francis, bottom center, as he walks into the Basilica of the National Shrine of the Immaculate Conception in Washington, Wednesday, Sept. 23, 2015, before holding a mass to canonize Junipero Serra. (AP Photo/Patrick Semansky, Pool)
Nuns sit in their pews while waiting for Pope Francis to arrive inside the Basilica of the National Shrine of the Immaculate Conception Wednesday, Sept. 23, 2015, in Washington. (AP Photo/David Goldman)
Pope Francis waves to the crowd from the popemobile during a parade in Washington, Wednesday, Sept. 23, 2015, following a state arrival ceremony at the White House hosted by President Barack Obama. (AP Photo/Alex Brandon, Pool)
Pope Francis conducts Mass outside the Basilica of the National Shrine of the Immaculate Conception Wednesday, Sept. 23, 2015, in Washington. (AP Photo/David Goldman)
Pope Francis addresses a joint meeting of Congress on Capitol Hill in Washington, Thursday, Sept. 24, 2015, making history as the first pontiff to do so. (AP Photo/Evan Vucci)
The sun begins to rise as people gather on Capitol Hill in Washington, Thursday, Sept. 24, 2015, for a chance to see Pope Francis. The pope spoke to the crowd outside from a balcony after his address to a joint meeting of Congress. (AP Photo/Patrick Semansky)
Pope Francis listens to applause before addressing a joint meeting of Congress on Capitol Hill in Washington, Thursday, Sept. 24, 2015, making history as the first pontiff to do so. (AP Photo/Alessandra Tarantino)
Cartrice Haynesworth, center, has a selfie taken with Pope Francis as he walks through the crowd during a visit to Catholic Charities of the Archdiocese of Washington, Thursday, Sept. 24, 2015. (AP Photo/David Goldman, Pool)
WASHINGTON, DC - SEPTEMBER 24: Mark Perez wears a button bearing the image of Pope Francis while waiting for him to arrive for a visit to Catholic Charities of the Archdiocese of Washington September 24, 2015, in Washington, DC. The charity serves dinner to about 300 homeless people daily at the site, and it will serve a meal during the pope's visit. (Photo by David Goldman-Pool/Getty Images)
Pope Francis touches the cheek of a young girl as he prepares to depart the Apostolic Nunciature, the Vatican's diplomatic mission in Washington, Thursday, Sept. 24, 2015, en route to Andrews Air Force Base. (AP Photo/Cliff Owen)
Pope Francis, accompanied by members of Congress, waves to the crowd from the Speakers Balcony on Capitol Hill in Washington, Thursday, Sept. 24, 2015, after addressing a joint meeting of Congress inside. Doug Mills / The New York Times via AP, Pool))
Pope Francis carries his own briefcase up the stairs before boarding his plane before leaving from Andrews Air Force Base, Md., en route to New York, Thursday, Sept. 24, 2015. (AP Photo/Jacquelyn Martin)
A New York City police officer searches nuns outside St. Patrick's Cathedral prior to the arrival of Pope Francis in New York, Thursday Sept. 24, 2015. (Damon Winter/The New York Times via AP, Pool)
Pope Francis engages well-wishers including Gerard Gubatan, of the Brooklyn borough of New York, center left, after arriving at John F. Kennedy International Airport Thursday, Sept. 24, 2015, in New York. (AP Photo/Craig Ruttle, Pool)
Pope Francisí motorcade moves through New York City streets, Thursday, Sept. 24, 2015, on the way to St. Patrickís Cathedral where he will lead an evening prayer service. (AP Photo/Richard Drew, Pool)
Audience members await the entrance of Pope Francis before he leads an evening prayer service at St. Patrick's Cathedral, Thursday, Sept. 24, 2015, in New York. (Robert Deutsch/USA Today via AP, Pool)
Faithful cheer as Pope Francis enters St. Patrick's Cathedral to lead an evening prayer service Thursday, Sept. 24, 2015, in New York. (AP Photo/Alessandra Tarantino)
Pope Francis waves at the audience while sitting in the head of state chair before addressing the 70th session of the United Nations General Assembly, Friday, Sept. 25, 2015 at United Nations headquarters. (AP Photo/Mary Altaffer)
Pope Francis addresses the 70th session of the United Nations General Assembly, Friday, Sept. 25, 2015 at United Nations headquarters. (AP Photo/Seth Wenig)
Pope Francis places a white rose at the South Pool of the 9/11 Memorial in downtown Manhattan, Friday, Sept. 25, 2015, in New York. (AP Photo/John Minchillo)
Pope Francis, center left, reads during a multi-religious service at the 9/11 Museum, Friday, Sept. 25, 2015 in New York. The Pope is on a two-day visit to New York which includes addressing the United Nations and holding mass at Madison Square Garden before heading to Philadelphia. (Monika Graff/Pool Photo via AP)
Pope Francis visits the 9/11 Museum, Friday, Sept. 25, 2015 in New York. (Susan Watts/New York Daily News via AP, Pool)
NEW YORK, NJ - SEPTEMBER 25: Pope Francis visits Our Lady Queen of Angels School September 25, 2015 in the East Harlem neighborhood of New York City. The pope is in New York on a two-day visit carrying out a number of engagements, including a papal motorcade through Central Park and celebrating Mass in Madison Square Garden. (Photo by Kena Betancur-Pool/Getty Images)
Pope Francis, center, enters Madison Square Garden to celebrate Mass, Friday, Sept. 25, 2015 New York. (Andrew Burton/Pool Photo via AP)
Pope Francis celebrates high Mass at Madison Square Garden, Friday, Sept 25, 2015, in New York. (Alejandra Villa/Newsday via AP, Pool)
A crucifix hangs above member of the clergy who watch as Pope Francis, not shown, celebrates Mass at Madison Square Garden, Friday, Sept. 25, 2015 New York. (Michael Appleton/The New York Times via AP, Pool)
In this photo provided by World Meeting of Families, Pope Francis kisses and blesses Michael Keating, 10, of Elverson, Pa after arriving in Philadelphia and exiting his car when he saw the boy, Saturday, Sept. 26, 2015, at Philadelphia International Airport. Keating has cerebral palsy and is the son of Chuck Keating, director of the Bishop Shanahan High School band that performed at Pope Francis' airport arrival. (Joseph Gidjunis/World Meeting of Families via AP) MANDATORY CREDIT
Colleen Feldmann, of Fallsington, Pa., center, and Sister Donna with Missionaries of Charity in India, right, cheer as Pope Francis arrives at the Cathedral Basilica of Saints Peter and Paul Saturday, Sept. 26, 2015, in Philadelphia. Francis wraps up his U.S. visit this weekend in Philadelphia, where he speaks in front of Independence Hall and celebrates Mass on the Benjamin Franklin Parkway to close out a big rally on Catholic families. (AP Photo/David Goldman)
Pope Francis passes the crowd in his pope mobile on Independence Mall in Philadelphia on Saturday, Sept. 26, 2015. The pope spoke at Independence Hall on his first visit to the United States. (AP Photo/Laurence Kesterson, Pool)
Pope Francis makes his way to the World Meeting of Families festival along Benjamin Franklin Parkway in Philadelphia on Saturday, Sept. 26, 2015. (Jewel Samad/Pool Photo via AP)
Pope Francis waves to the crowd from the popemobile during a parade along the Benjamin Franklin Parkway on Saturday, June 26, 2015, in Philadelphia. (AP Photo/Michael Perez)
Pope Francis waves to the crowd during a parade Saturday, Sept. 26, 2015, in Philadelphia. The pontiff attended a music-and-prayer festival there Saturday night to close out the World Meeting of Families, a Vatican-sponsored conference of more than 18,000 people from around the world. (AP Photo/Matt Rourke, Pool)
PHILADELPHIA, PA - SEPTEMBER 26: Pope Francis waves to the crowd gathered on the route to the Festival of Families along Benjamin Franklin Parkway on September 26, 2015 in Philadelphia, Pennsylvania. The Pope is concluding his U.S. tour by spending two days in Philadelphia, having visited Washington D.C. and New York City. (Photo by Eric Thayer-Pool/Getty Images)
American singer Aretha Franklin sings as Pope Francis and others listen during the World Meeting of Families festival in Philadelphia, Saturday, Sept. 26, 2015. (Tony Gentile/Pool Photo via AP)
Pope Francis greets inmates during his visit to Curran Fromhold Correctional Facility in Philadelphia, Sunday, Sept. 27, 2015. (David Maialetti/The Philadelphia Inquirer, Pool)
Pope Francis gestures to inmates next to a wooden chair made for him by inmates during his visit to Curran-Fromhold Correctional Facility in Philadelphia, Sunday, Sept. 27, 2015. (Tony Gentile/Pool Photo via AP)
People gather on the Benjamin Franklin Parkway before the Papal Mass on Sunday, Sept. 27, 2015, in Philadelphia. Pope Francis is in Philadelphia for the last leg of his six-day visit to the United States. (AP Photo/Michael Perez)
Pope Francis waves from his popemobile as he heads to celebrate Mass at the conclusion of the World Meeting of Families along the Benjamin Franklin Parkway in Philadelphia, Sunday, Sept. 27, 2015. (Tony Gentile/Pool Photo via AP)
WYNNEWOOD, PA - SEPTEMBER 27: Pope Francis greets seminarians as he walks the loggia to his address to the Bishops at St. Martin of Tours Chapel at Saint Charles Borromeo Seminary, September 27, 2015 in Wynnewwod, Pennsylvania. After visiting Washington and New York City, Pope Francis concludes his tour of the U.S. with events in Philadelphia on Saturday and Sunday. ((Photo by Tom Gralish-Pool/Getty Images)
Pope Francis waves to the crowd at Philadelphia International Airport in Philadelphia as he departs for Rome on Sunday, Sept. 27, 2015. Pope Francis wrapped up his 10-day trip to Cuba and the United States on Sunday. (AP Photo/Laurence Kesterson, pool)
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PAPAL USHER

The report by Vatican financial investigators zeroes in on the activity of Giampietro Nattino, chairman of Banca Finnat Euroamerica S.p.A, a family-run private Italian bank.

Vatican investigators suspect Nattino used the APSA accounts for personal trades on the Italian stock market, the report says, adding that the balance of more than 2 million euros was moved to Switzerland when the accounts were closed days before the Vatican introduced stricter new laws against money laundering that put money transfers under more scrutiny.

From May 22, 2000 to March 29, 2011 Nattino, who has served on the board of many Italian firms and volunteered as an usher in the papal palace, was the owner of APSA "Portfolio 339", which consisted of four separate accounts, the report says.

The report speaks of the "dubious origin and dubious final destination of the funds in the closing of portfolio 339" and asks why Nattino was allowed to have accounts at APSA in the first place in apparent violation of department regulations.

Those regulations, which are published on the Vatican's website and mentioned in the internal report, say the department can carry out financial transactions for third parties only on an "exceptional basis" and only with prior permission of the cardinal in charge.

Financial investigators gave their findings to the Vatican's Promoter of Justice, or chief prosecutor, Gian Piero Milano, a senior Vatican source said, adding that Milano had opened his own investigation.

The investigators asked the prosecutor to look into possible money laundering, insider trading and market manipulation related to Nattino's accounts at the conclusion of their report, which includes some 30 charts and graphs detailing stock holdings and transactions and bank transfers.

Vatican investigators suspect that on one occasion when his bank handled a stock placement, the APSA accounts were used to buy shares before they were allocated to other investors, according to the document.

SEE ALSO: Vatican bracing for new revelations of mismanagement

The investigators also asked the prosecutor to look into "potential co-responsibility" by APSA staff in execution of the activity in the accounts and if the procedures followed "rules and internal practices" at the department.

Nattino's daughter Paola, who acts as company spokeswoman, declined to comment about Portfolio 339 and suspicions of irregularities connected to the accounts, saying in an email to Reuters that "it is our custom not to issue statements".

Milano's office did not return phone calls about the case. It has said in the past that it does not comment on investigations.

ANOMALY

The cardinal in charge of APSA from 2002 to 2011, eight of the 11 years covered by the investigation, was Italian Attilio Nicora, who is now retired.

The report does not specifically mention Nicora but cites the APSA regulation that only its head can exceptionally authorize financial operations for third parties.

In a letter to Reuters, Nicora said only that APSA was not a bank "because it does not lend money", but declined to comment on a list of questions sent by email via his secretary.

In one apparent anomaly, a 2012 evaluation of the Vatican by Moneyval, an arm of the Council of Europe that assesses compliance with international anti-money laundering standards, says APSA officials had told it that in 2001 the department decided to phase out individual account holders and that no new funds had been allowed to enter such accounts since then.

But the report on the internal investigation seen by Reuters says money was deposited into such APSA accounts from outside sources or moved between them in APSA as late as 2009.

APSA made headlines in June 2013 with the arrest of Monsignor Nunzio Scarano, who worked there for 22 years as a senior accountant. He is on trial in two cases. The first is on charges of conspiracy to smuggle 20 million euros in cash into Italy from Switzerland to help friends avoid taxes and the other is on charges he used the Vatican bank for money laundering. He denies all wrongdoing.

RELATED: Read some of Pope Francis' most provocative quotes

10 PHOTOS
10 of Pope Francis’s Most Provocative Quotes
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Exclusive: Vatican inspectors suspect key office was used for money laundering

"Hatred is not to be carried in the name of God! War is not to be waged in the name of God!"

October 8, 2014, St. Peter’s Square

(Photo by Franco Origlia/Getty Images)

"Women in the church are more important than bishops and priests."

June 28, 2013, on a flight to Rome

(Photo by Franco Origlia/Getty Images)

"Some think, excuse me if I use the word, that in order to be good Catholics, we have to be like rabbits — but no."

January 19, 2015, on a flight to Rome

(Photo credit should read GIUSEPPE CACACE/AFP/Getty Images)

"I see clearly that the thing the church needs most today is the ability to heal wounds and to warm the hearts of the faithful ... I see the church as a field hospital after battle."

September 30, 2013, interview, America magazine

 (Photo credit should read VINCENZO PINTO/AFP/Getty Images)

"I believe in God, not in a Catholic God, there is no Catholic God, there is God and I believe in Jesus Christ, his incarnation."

October 1, 2013, interview, La Repubblica newspaper

(Photo by Franco Origlia/Getty Images)

"Men and women are sacrificed to the idols of profit and consumption: it is the ‘culture of waste.’ If a computer breaks it is a tragedy, but poverty, the needs and dramas of so many people end up being considered normal."

June 5, 2013, St. Peter’s Square

(Photo credit should read FILIPPO MONTEFORTE/AFP/Getty Images)

"Perhaps you were mad, perhaps plates flew, but please remember this: never let the sun go down without making peace! Never, never, never!"

February 14, 2014, St. Peter’s Square

(Photo by Franco Origlia/Getty Images)

"Do you open your hearts to the memories that your grandparents pass on? Grandparents are like the wisdom of the family, they are the wisdom of a people."

October 26, 2013, St. Peter’s Square

(Photo by Franco Origlia/Getty Images)

"True love is both loving and letting oneself be loved. It is harder to let ourselves be loved than it is to love." 

January 18, 2015, Manila, Philippines

 (AP Photo/Alessandra Tarantino)

"Instead of being just a church that welcomes and receives by keeping the doors open, let us try also to be a church that finds new roads ... to those who have quit or are indifferent."

September 30, 2013, interview, America magazine

(AP Photo/Riccardo De Luca)
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