The Vatican is facing allegations it used a “skeleton key for money laundering” by illegally manipulating bank transfers.
The city state’s former top financial cop ― who was forced out in 2017 ― has claimed that its payroll agency was able to alter the names and account numbers on transactions after they were made, masking the identity of recipients and senders.
The implication would be enormous because it would have made it possible for Vatican officials to wire funds to private clients without revealing who they were, possibly enabling unlimited money laundering and violating the most basic anti-fraud rules.
The claims come at an awkward moment for new Pope Leo XIV as he seeks to boost the Catholic Church’s reputation after decades of rolling financial scandals and a looming budget shortfall.
The Vatican denies all the allegations and people familiar with SWIFT, the organization that facilitates international bank transfers, say what the Vatican is being accused of is technically impossible. Yet, the allegations are being taken seriously because of the credibility of the people making them and because of the Vatican’s history of misconduct.
Accused of being a spy
What adds to the intrigue is how closely the allegations mesh with internal Vatican politics.
They come from Libero Milone, former auditor at Deloitte, a top accountancy firm, who was appointed by the late Pope Francis in 2015 to fix the Vatican’s finances after years of scandal and neglect.
Two years later, he was forced to resign after senior officials accused him of being a spy.
He claims he was pushed out because he had identified financial wrongdoing connected to the city state’s former police chief and cardinal, Giovanni Angelo Becciu, who was convicted of embezzlement in 2023 after misusing Vatican funds.
Milone first mentioned the apparent existence of tools that could edit international bank account numbers (IBANs) in transfers in the international SWIFT system last month, following the collapse of a case he brought against the Vatican for wrongful dismissal.
The Pillar, a Catholic website, followed up with a series of articles signaling that Milone was sitting on a pile of potentially explosive material on practices uncovered during his time at the Vatican and was considering whether to deploy it to bolster his case.
Describing the IBAN editing tool as a “skeleton key for money laundering,” The Pillar said that if proven, “the Vatican would likely end up on an international financial black list of the darkest kind, frozen out of the international banking system, meaning no money could come in or out of the city state except in literal, physical cash.”
No blackmail
In a press conference last week, Milone himself corroborated the allegations. However, he refused to provide additional documentation or go beyond what The Pillar journalist Ed Condon reported.
“I have a piece of paper which says that they can change the transactions — they can change the name — at any time,” Milone said in response to a question by POLITICO. He also intimated that he had further damaging evidence of malpractice in the city state but again refused to say what, insisting that he didn’t want to draw attention to himself. “I’m not trying to blackmail anyone,” he told reporters.
Milone said he first learned of the tool when he was asked to look into it by Cardinal George Pell, an Australian cleric appointed under the same transparency drive. Pell was forced to return to his native country in 2017 to face child abuse allegations, for which he was later cleared. He died in 2023.
In a letter addressed to Milone and dated 2016, a copy of which The Pillar shared with POLITICO, Pell said he had been “alerted” to a request from APSA, the Vatican’s payroll agency, “to amend the controls in the SWIFT system,” an action he described as “potentially … illegal.”
Milone’s office investigated Pell’s claims, and the auditor flagged them to senior officials including Pope Francis and Secretary of State Pietro Parolin, as well as the Vatican’s chief justice official and the Vatican’s internal watchdog, ASIF. But he received no response from the latter two, which he said had a duty to investigate — part of a broader pattern of institutional resistance to Francis’ reform effort in which the late pontiff was routinely outmaneuvered, he said.
‘Completely unfounded’
The Vatican has vehemently denied the allegations. In a statement shared with POLITICO, spokesperson Matteo Bruni said the claims were “completely unfounded” and that APSA had not served private clients in 2016, when the letter was sent.
APSA did indeed shut down its personal accounts in order to exempt itself from oversight by Council of Europe anti-money-laundering agency Moneyval in 2015, but the financial tools might have been used before then, or else used to hide transactions involving private clients processed after that date, Condon argued in a blog post.
Bruni also denied any continued malpractice, pointing to audits of APSA by watchdog ASIF and PricewaterhouseCoopers between 2020 and 2024 that found “no anomalies.”
A person familiar with how SWIFT operates, speaking on condition of anonymity, insisted to POLITICO that “it is not possible to alter the content of a payment message once it has been sent,” owing to the use of verifiable digital signatures and high-level encryption that applies also to SWIFT clients.
Milone said he didn’t know exactly how the tools would have bypassed these restrictions, but that he saw evidence that transactions were edited.
God’s banker
Ahead of the May conclave that elected Leo, cardinals complained about a budget deficit that is said to have widened substantially in recent years, thanks to a downturn in donations that accelerated under Francis. The new pontiff was chosen in part because he was seen as somebody who could restore credibility among powerful donors, particularly in the U.S., insiders told POLITICO earlier this year.
Recent developments have already restored some confidence. After bumper earnings reported earlier this year by the Institute of the Works of Religion (IOR), the Vatican’s long-troubled investment vehicle, APSA recently recorded €62.2 million in profit for 2024, up from €45.9 million.
Milone’s allegations would undermine that progress, and resurface unhappy memories of financial scandals past that date back to the days of Pope Paul XI and John Paul II. In the 1980s and ’90s, Italian magistrates investigated allegations that the IOR had been used to launder Cosa Nostra profits to bankroll anti-communist movements in Latin America and Eastern Europe.
The investigations came after Vatican-connected Milanese banker Roberto Calvi, dubbed “God’s banker,” was found hanging under London’s Blackfriars bridge in 1982. Calvi was alleged to have aided the scheme in concert with an array of international interests spanning not only the IOR, but also far-right political and business figures, Italian Freemasonry and U.S. intelligence services.
The Vatican never acknowledged wrongdoing but did admit “moral involvement” for the collapse of Calvi’s bank, Banco Ambrosiano.
More recently, in 2023, Cardinal Becciu, a once-powerful cardinal in the Vatican’s Secretariat of State, was convicted after being found to have siphoned Vatican funds to a Sardinian charity connected to his family. Becciu was also convicted for his role in a botched London real estate deal that cost the Vatican over €100 million.
The post Vatican under fire for alleged money-laundering dodge appeared first on Politico.
