Prosecutors allege two former top executives at the Vatican bank failed to give sufficient information on bank transfers in break of Italian anti-money laundering laws, Reuters reports.
Prosecutors stopped short of accusing the men of money laundering but said confusion over the handling of IOR accounts had created the conditions where it could take place.
Key details missing on requested transfers included the identity of the owners of the funds and the reason for transfer.
Italy, along with other EU nations, adopted a 2005 European Union directive on fighting money laundering in 2007. Among the regulations, banks are obliged to verify the identity of customers.
The two men, former IOR director general Paolo Cipriani and former deputy director general Massimo Tulli have not been charged with any crime. Based on the results of the probe, a judge will determine if there is sufficient evidence to charge them. Cipriani's lawyer Vincenzo Scordamaglia said the events at the centre of the investigation took place several years ago and declined to comment when Reuters contacted him by telephone.
The allegations were contained in two documents filed by prosecutors with a Rome court detailing a long-running investigation into alleged breaches of anti-money laundering laws that ended two weeks ago. The prosecutors focused on 15 irregular bank transfers ordered by Cipriani and Tulli to bank accounts in Italy and Germany. The transactions were deemed irregular as they did not provide details on the origin of the money and on the reason for the bank transfers.
The prosecutors do not at any stage in the documents suggest that the transfers were related to the illicit funding of criminal activities.
In the documents, Italian prosecutors said former IOR Chairman Ettore Gotti Tedeschi, who attempted to improve practices at the IOR before he was fired in 2012, was no longer under investigation. His lawyer, Fulvio Palazzo, was not immediately available for comment.
In the largest transfer, prosecutors say that Cipriani and Tulli signed a fax on Sept. 6, 2010, ordering 20 million euros ($26 million at today's rate) be moved from an IOR account in Italy to another account in Germany.