Scandal-plagued Vatican Bank gets Pope's permission to carry on

The building which hosts the Vatican bank, formerly known as the Institute for Religious Works, IOR, is shown in a picture taken Tuesday, Dec. 3, 2013. (AP / Gregorio Borgia)

VATICAN CITY -- Pope Francis gave his backing Monday to the scandal-tainted Vatican Bank to carry on provided it presses ahead with efforts to bring its banking practices up to international standards.

To continue operating, the bank, which has been caught up in money-laundering probes conducted by Italian judicial authorities, has to make itself more transparent and enact international best banking practices.

The pope's decision could surprise some observers who had speculated that Francis might pull the plug on the bank, also known as the Institute for Religious Works (IOR) -- last year, Francis noted that "St. Peter didn't have a bank account" and that some were advising him to close the bank down.

In a statement Monday, the Vatican said "the valuable services that can be offered by the Institute assist the Holy Father in his mission as universal pastor."

Referring to reforms sparked by the probes, the Vatican said the bank's executives and managers will finalize plans to ensure the institute can fulfil its mission "as part of the Holy See's new financial structures." In announcing Francis' approval for the bank's future, it stressed that the IOR must follow 2013 papal directives on "transparency, supervision and financial information."

The bank's spokesman, Max Hohenberg, said the pope's decision "represents a powerful endorsement of our very mission and the hard work accomplished over the past 12 months." Francis was elected pope in March 2013 and fixing the bank as part of a broader reform program has been one of his priorities over the past year.

Hohenberg said the bank is aiming to "complete its client screening by the summer of this year, improve its integration with other Vatican City State structures and introduce other operational improvements."

Pressed to meet international banking standards, the IOR, which isn't open to the general public, has been combing through its client list to reduce the possibility that it could serve as an off-shore haven for illicit revenues.

In 2010, Rome prosecutors began a money-laundering investigation, leading to the seizure of 23 million euros ($31 million) from a Vatican account at an Italian bank. Another probe by Italian authorities led to the arrest of a Vatican monsignor in an alleged money-smuggling operation and a money-laundering case involving his Vatican bank accounts.