Many of the areas where the Vatican fell short in 2012 have been addressed by the new legislation, Moneyval said.
One area that had been singled out for criticism in the 2012 report was the bank's lax customer due diligence practices, which are necessary to make sure the bank knows who its clients are and where their money comes from. The revised report noted continued shortcomings — there's still no clear law about who can have an account at the IOR — and said only 30 percent of the bank's accounts had been reviewed by October; the review was to have been completed a year ago.
Bank officials noted that the first batch of accounts that were reviewed were the highest-risk accounts and therefore took more time; they say the pace is faster now and that the process is expected to be completed by the first quarter in 2014.
The Moneyval report said the bank, which was founded in 1942 by Pope Pius XII to manage assets destined for religious or charitable works, is considering codifying a law to clarify its client base and is now closing accounts that "are not strictly related to the purpose of the IOR at the service of the Catholic Church."
The head of the Vatican delegation to the Moneyval committee, Monsignor Antoine Camilleri, said the report confirmed the Vatican's "significant efforts."
"The Holy See is fully committed to continuing to improve further the effective implementation of all necessary measures to build a well-functioning and sustainable system aimed at preventing and fighting financial crimes," he said in a statement.
Follow Nicole Winfield at www.twitter.com/nwinfield
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