The short "Motu Proprio", a decree of Francis's own initiative, strengthens the supervision of financial transactions "in response to a recommendation of the Moneyval Committee," the European watchdog which carried out a review of the Vatican bank last year.
It includes the creation of a new Financial Security Committee to help increase vigilance and coordinate efforts in countering corruption. It also extends laws which previously only applied to the tiny state to the "institutes and entities dependent on the Holy See, as well as to nonprofit organisations" -- such as the Caritas International humanitarian organisation.
The decree is just the latest in a series of bold moves on the part of the pontiff to clean up the institution's murky financial image. "It is a means of ensuring the road (towards transparency) continues," Vatican spokesman Federico Lombardi said in a press conference. "In today's world, it is all about resisting increasingly insidious forms of financial criminality. We have to be equal to the challenges in order to protect legality, and not be left behind," he said.
The Vatican is attempting to reform its finances to get onto a "white list" of states that respect international fraud rules. What has been hailed as a potential revolution by many religious watchers began with the appointment mid-June of one of the pope's trusted allies to oversee management of the Institute for Religious Works (IOR) -- as the bank is known.
The 76-year-old pontiff followed this by installing a special five-member commission tasked with investigating the bank and reporting their findings directly back to him personally. The commission's first report is expected in October, and may spark wider reforms of the murky institute.
A US consultancy firm, Promontory Financial Group, has also been tasked with conducting an external review of the bank's rules on money laundering.
The IOR, which does not lend money, handles funds for Vatican departments, Catholic charities and congregations as well as priests and nuns living and working around the world, and has a troubled history. It was the main shareholder of the Banco Ambrosiano, which collapsed in 1982 amid accusations of laundering money for the Sicilian mafia.
The chairman of Banco Ambrosiano, Roberto Calvi -- dubbed "God's Banker" in the press -- was found hanging from Blackfriars Bridge in London that year in a suspected murder by mobsters.
Francis, and Benedict XVI before him, moved to act after a string of scandals and reports in Italian media about anonymous accounts at the bank being used by organised crime figures and fraudsters.
By Guylain Gustave Moke
Photo-Credit: AFP-Pope Francis