Rome: Italian prosecutors launched an investigation into the Vatican bank`s top executives on Tuesday for allegedly violating money laundering legislation, triggering a sharp rebuttal by the Vatican.
Prosecutors seized 23 million euros (30 million dollars) belonging to the the Istituto per le Opere di Religione (IOR) and opened an inquiry against chairman Ettore Gotti Tedeschi and chief executive Paolo Cipriani.
The Vatican Secretariat of State said in a statement it was "perplexed and astonished" at the investigation by the Rome prosecutor`s office.
Both executives are accused of violating legislation passed in 2007 that requires banks to disclose information on financial operations.
The Vatican said the information was already in the hands of the Bank of Italy and that similar operations to the ones under investigation have regularly taken place with other Italian banks.
"The Holy See`s authorities` evident willingness to be fully transparent regarding IOR`s financial operations is well known," the Vatican added.
The funds were seized temporarily from IOR`s deposits in another Italian bank, Credito Artigiano, according to the ANSA news agency.
The probe was launched after an office at the Bank of Italy in September suspended two IOR operations it deemed suspicious worth a total of about 20 million euros, with JP Morgan Frankfurt and another one towards Italian bank Banca del Fucino, ANSA reported.
"IOR authorities have long worked and met with the bank of Italy and with the competent international organisations" to place the Holy See on a money laundering and terrorism white list, the Vatican said.
The IOR manages bank accounts for religious orders and Catholic associations and benefits from Vatican offshore status.
The Vatican also expressed its support for Gotti Tedeschi and Cipriani.
"The Holy see wants to express the maximum confidence in the president and in the chief executive of the IOR," the statement said.
According to earlier reports in the Italian press, investigators suspect that subjects with their fiscal residence in Italy are using the IOR as a "screen" to hide dealings such as fraud or tax evasion.
In September 2009 the IOR nominated Gotti Tedeschi, Spanish banking giant Santander`s representative in Italy, as its new head.
The appointment was greeted at the time as a move towards greater transparency at the IOR.
US archbishop Paul Marcinkus headed the bank between 1971 and 1989 when it was caught up in scandals including the collapse of the private Italian bank, Banco Ambrosiano in 1982 amid accusations of links to organised crime and political militancy.