Vatican bank director, deputy resign amid scandal

ROME The director of the embattled Vatican bank and his deputy resigned Monday following the latest developments in a broadening finance scandal that has already landed one Vatican monsignor in prison and added urgency to Pope Francis' reform efforts.

The Vatican said in a statement that Paolo Cipriani and his deputy, Massimo Tulli, stepped down "in the best interest of the institute and the Holy See."

Cipriani, along with the bank's then-president, was placed under investigation by Rome prosecutors in 2010 for alleged violations of Italy's anti-money-laundering norms after financial police seized 23 million euros ($30 million) from a Vatican account at a Rome bank. Neither has been charged, and the money was eventually ordered released.

But the bank, known as the Institute for Religious Works, has remained under the glare of prosecutors and now Francis amid fresh concerns it has been used as an offshore tax haven.

Last week, a Vatican accountant was arrested as part of Rome prosecutors' broadening investigation into the IOR. Monsignor Nunzio Scarano is accused of corruption and slander in connection with a plot to smuggle 20 million euros into Italy from Switzerland without reporting it to customs officials.

Scarano, dubbed "Don 500" by the Italian media because of his purported favorite euro banknote, acknowledged under questioning Monday that his behavior was wrong but that he was only trying to help out friends, attorney Silverio Sica told The Associated Press.

According to wiretapped phone conversations, Scarano was in touch regularly with both Cipriani and Tulli to get the required bank approval to move large amounts of cash into and out of his IOR accounts. Scarano had two such accounts: a personal one and one called Fondo Anziani to receive charitable donations for projects to help the elderly, prosecutors say.

In addition to his Rome arrest, Scarano is also under investigation in the southern city of Salerno for alleged money-laundering stemming from a 560,000 euro cash withdrawal he made from his IOR charity account in 2009. Sica, the attorney, has said Scarano arranged complicated transactions with dozens of other people and eventually used the money to pay off a mortgage.

The group of five cardinals overseeing the IOR accepted the resignations of Cipriani and Tulli and tapped the IOR's current president, German financier and aristocrat Ernst von Freyberg, to serve as interim director, a Vatican statement said.

Von Freyberg, who was named IOR president in February following the ouster last year of Italian banker Ettore Gotti Tedeschi for incompetence, thanked Cipriani and Tulli for their years of work and said much progress has been made in recent years to bring greater transparency to the Vatican's finances.

"While we are grateful for what has been achieved, it is clear today that we need new leadership to increase the pace of this transformation process," von Freyberg said in a statement.

Italian banker Rolando Marranci was named acting deputy and another banking expert, Antonio Montaresi, has been brought into a new position as chief risk officer to help ensure the IOR complies with anti-money laundering and anti-terrorism norms.

The IOR's board has begun the process of finding a permanent director and deputy director, the statement said.