Moneyval, the Strasbourg-based financial monitoring body of the Council of Europe, said that while the Vatican had made progress in cleaning up its controversial bank and other financial departments in recent years, it still had a long way to go, to fully eradicate illegal practices.
"There is a need now for the anti-money laundering and counter terrorist financing system, to deliver effective results in terms of prosecutions, convictions and confiscation," the report said.
Although the Vatican has introduced a series of legal measures to tackle money laundering, including the launch of 29 investigations which have so far resulted in US$12.1 million (€11 m), the city-state has attracted criticism due to the fact that no one has been arrested or indicted over malpractice.
"There still remains, however, a continued lack of indictments for money laundering or for related serious proceeds-generating offenses in the three years since [a similar report in 2012]. This situation needs to be improved," the Moneyval report stated.
While the increased investigations are pleasing, the financial watchdog said "there are no real results emerging by way of serious prosecutions in any of the outstanding enquiries."
However, the European financial watchdog has called for more to be done to see real results from the legislative changes.
"All in all, the basically sound legal structure that has been put in place to prevent and prosecute money-laundering now needs to deliver some real results on the prosecutorial side," the report concluded.
Following Moneyval's adoption of its latest report, the Vatican's deputy foreign minister, Monsignor Antoine Camilleri was optimistic of the changes made, saying the findings "confirm that the Holy See has established a functional, sustainable and effective system, aiming at preventing and fighting financial crimes."
