Assets seized

The head of the Vatican bank, Ettore Gotti Tedeschi, has been placed under investigation for suspected money-laundering, judicial sources said on Tuesday.

Italian financial authorities have seized 23 million euros ($30 million) from an account in the bank, officially known as the Institute for Works of Religion (IOR).

The Vatican responded saying that it was "perplexed and astonished" by the case, which is being investigated by Rome magistrates.

A report by the Italian news agency ANSA says the money was seized as a precaution.

Tedeschi and another bank manager are said to be under suspicion of breaking legislation that obliges banks to disclose information about their operations.

More than a year ago, Italian investigators were reported to have been scrutinizing bank transactions worth millions of euros to see if they transgressed money laundering rules.

Vatican says it backs bank transparency

The Italian press has reported that investigators suspect that individuals have used the bank as a "screen" to hide crimes such as fraud or tax evasion.

The bank was last involved in a major scandal in 1982, when it was linked to the fraudulent bankruptcy of Banco Ambrosiano - then Italy's largest private bank.

US archbishop Paul Marcinkus headed the bank at the time amid accusations that the institution was linked to organized crime and alleged terrorist activities.

Author: Richard Connor (Reuters/dpa/AFP/AP)

Editor: Susan Houlton