Its entrance is watched over by pantaloon-wearing soldiers from the Swiss Guard, its cash-dispensing machines give instructions in Latin, and its headquarters are in a 15th-century tower that was once used as a papal prison.
But seven months into the papacy of Pope Francis, it is clear that the imposing stone walls of the Tower of Pope Nicholas V are no match for the South American pontiff’s determination to clear up the Vatican bank’s finances after years of scandal and allegations of impropriety.
The pope, who has criticized the iniquities of the international banking system since he was selected in March, has embarked on a campaign to dramatically improve the transparency and accountability of an institution that Forbes last year called “The Most Secret Bank in the World.” The bank manages funds and accounts held by the Holy See, as well as Catholic charities and orders around the world, and individual cardinals, priests, and nuns.
The latest initiative came this week, when the Vatican passed a new law designed to improve financial transparency, enhance cooperation with other countries and law enforcement agencies, and prevent money laundering and tax evasion.
Despite being the bank of popes, the Institute for Works of Religion, as the bank is officially called, has been accused in the past of permitting suspect financial transactions by some of its account holders, particularly foreign embassies in Rome that are accredited to the Holy See.
Since then, the pace of change has been fast, at least by the standards of the Vatican, where change is normally measured in decades, if not centuries.
Earlier this month the bank published its accounts for the first time in its 125-year history, revealing that its earnings for 2012 were 86.6 million euros – more than four times higher than in 2011.
The massive increase in earnings was largely due to a sharp rise in the value of Italian government debt held by the Holy See institution – a result of confidence-boosting measures taken by the European Central Bank and the appointment in November 2011 of Mario Monti as prime minister of Italy.
The 100-page report showed that the bank owns a wide range of assets, including more than 41 million euros worth of gold, precious coins, and medals.
Deposits and portraits of the Virgin MaryIf the hulking exterior of the institution sets it apart from the Main Street banks familiar to most people, then so too does its interior.
In a large circular room ringed by cashiers’ desks, priests wait patiently alongside nuns to withdraw money or check the balance of their accounts.
In the bank’s offices and corridors, the normal range of potted plants and photocopiers is mixed with bronze busts of popes, portraits of Francis, and statuettes of the Virgin Mary.
Tucked away on an upper floor, a team of forensic accounting experts from Promontory Financial Group, a US-based regulatory compliance consulting firm, is systematically screening the 19,000 accounts held by the bank.
With 7,000 accounts now checked, around 900 individuals and institutions have been told to close their accounts and move their money elsewhere after investigators ruled that they did not conform to the new, more stringent rules on depositors. They were not necessarily guilty of money laundering, fraud, or other financial crimes, says Max Hohenberg, the bank’s spokesman.
“They may have committed zero legal wrongdoing but for statutory reasons have been excluded,” Mr. Hohenberg says.
The auditing operation is being overseen by the bank’s newly-appointed president, Ernst von Freyberg, a German lawyer with an aristocratic pedigree.
He displays the sort of direct, no-nonsense approach favored by his boss, Pope Francis. When it became clear that the office allocated to the Promontory experts was not big enough, he gave up his own.
Mr. Von Freyberg took up his post in February after his predecessor, Ettore Gotti Tedeschi, was abruptly dismissed last year after being accused of neglecting basic management responsibilities at the bank, which holds more than 7 billion euros in assets.
Von Freyberg says he and his team have made “enormous progress” but that there remains work to be done in making the bank more transparent.
“We need to become compliant with international financial laws, including on money laundering. The Pope strongly endorses a Vatican bank that serves the Church and no one else,” he says.
The bank has had a tarnished image ever since Roberto Calvi, dubbed “God’s banker,” was found hanging beneath Blackfriars Bridge in London in 1982.
Nobody has ever been found guilty of his murder, but there has been intense speculation that he had lost money entrusted to him by the Italian Mafia and that he paid with his life.
Mr. Calvi was the chairman of Banco Ambrosiano, an Italian bank that collapsed with massive losses. The Vatican was its main shareholder.
It was the darkest chapter of the bank’s history but by no means its only scandal.
Earlier this year the director general and his deputy were placed under investigation for money laundering and forced to resign.
It has come under intense scrutiny by Moneyval, the Council of Europe's anti-money-laundering committee, which said last year that while the Holy See had taken steps to improve standards, more needed to be done. Moneyval is due to conduct a new assessment later this year.
Just as the reform efforts were getting under way this summer, another scandal emerged.
A senior prelate working as an accountant in a related Vatican finance department was arrested in June and accused of trying to smuggle 20 million euros in cash from Switzerland to Italy aboard a private plane.
Nunzio Scarano, who was nicknamed by his peers “Monsignor 500” for his habit of showing off a wallet full of 500 euro notes, denies the charges but will face trial in December.
In an interview on Thursday, he said he feared that he would be poisoned for his cooperation with Italian investigators.
''I have told of episodes that could put me in danger. I am trying to be stronger than the fear and nightmares that torment me, but despite my prayers, I am certain that I will die by poisoning,'' Mr. Scarano, who worked at the Holy See's asset-management agency, told Libero, a daily newspaper.
He claimed that he had been made a “scapegoat” for powerful figures within the Vatican “against whom the pope, illuminated by the Holy Spirit, is already taking wise decisions.'' Those decisions will determine whether the scandal-ridden bank can clean up its act once and for all, as Pope Francis seeks to haul it into the 21st century.