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The Vatican Bank, known more properly as the Institute for Works of Religion, is a financial institution located within the Vatican that handles funds used for charitable and religious works. A chief executive officer manages the day-to-day operations of the bank, including investment decisions and disbursements of funds, with the assistance of a supervisory council. This organization reports to a committee of cardinals in the Roman Catholic Church, as well as directly to the Pope.
Pope Pius XII founded the Vatican Bank in 1942 to replace an older institution. This organization is not part of the formal hierarchy of the Roman Catholic Church and thus has some degree of autonomy in terms of how it makes decisions and handles its funds. While it must report to the Pope and a group of cardinals, it has considerable latitude for making investments and providing funds for various endeavors of the church.
Substantial sums move through the Vatican Bank each year. Having an institution set aside specifically for religious and charitable operations allows the Vatican to use donor funds as well as earnings from the church as efficiently and effectively as possible. A number of charities run by the church receive their funding directly from the Vatican Bank. It operates separately from other economic organizations within the church, and the assets on deposit there are not the property of the Holy See.
The Vatican publishes information about the operations of this institution regularly in an annual report covering a wide variety of other activities within the church, including other economic activities. It publicly lists the members of the supervisory committee and provides other basic information about the organization's structure and functions. People who are not affiliated with the church cannot use this bank as a depository institution and may have difficulty accessing bank officials if they have questions or concerns about funds or other assets held by the Vatican Bank.
This organization has experienced some scandal. The Vatican is its own nation and is not subject to Italian law, although it is located within the city of Rome. It is also not a member of the European Union and thus does not need to abide by banking standards set by regulatory agencies. Lawsuits against the Vatican Bank have claimed it was used as a repository for ill-gotten gains from the Second World War. The bank has also been under investigation multiple times on charges of money laundering.
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