THE VATICAN, whose bank is the focus of a money laundering investigation, has enacted laws to bring it in line with international standards on financial transparency and the fight against funding terrorism.

It was the biggest action yet taken by the Vatican to meet international demands for more financial openness.

Pope Benedict signed a motu proprio yesterday, a form of executive order, in which the Vatican establishes a set of internal laws which promise that its bank and all other departments will adhere to regulations and co-operate with foreign authorities.

Spokesman Fr Federico Lombardi said: “The Vatican now is totally inserted into this system in solidarity with the international community and with international authorities.”

The new laws of the Vatican City, a 108-acre sovereign state surrounded by Rome, aim to make it comply with the rules of the Financial Action Task Force, a Paris-based body that lists nations failing to comply with standards on money laundering and terrorism financing.

By adopting the new laws, including establishing a Financial Information Authority along the lines of those in other countries, the Vatican commits itself to comply with taskforce standards and liaise with the group and law enforcement agencies.

The new laws, about 30 pages and consisting of more than 50 articles, will take effect by April 1st, after the Financial Information Authority is set up and its members chosen, the Vatican says. Significantly, they affect not only the Vatican Bank but all departments.

This means offices such as its missionary arm, which handles tens of millions of euros a year, will also be subjected to stringent regulations and oversight.

Fr Lombardi said the new legislation would make Vatican institutions “less vulnerable” to misuse and would make the Catholic Church “more credible before the members of the international community”.