Vatican lacking in anti-terror finance measures The Council of Europe on Wednesday released a report that marked a milestone in the Holy See's efforts to shed its reputation as a shady tax haven long mired in secrecy and scandal. The report showed the Vatican had received compliant or largely compliant grades on nine of the 16 "key and core" internationally recognised recommendations to fight money laundering and terrorist financing. But seven other areas were found lacking, particularly its anti-terror finance measures and the Vatican's financial oversight agency, created amid much fanfare in 2010 to try to respond to international demands for greater fiscal transparency to win a place on the "white list" of financially transparent countries. The report found the agency had yet to conduct any inspections, and that its role, authority and independence needed clarification. The so-called Moneyval committee praised the Holy See for making so much progress in a short amount of time, but said more needs to be done. "We take both the praise and criticism contained in the report with seriousness," said Monsignor Ettore Balestrero, undersecretary of state and the head of the Vatican delegation to the Moneyval committee. In particular, it said the Vatican bank, long the subject of rumour and scandal, should be independently supervised and should make rules about who is eligible to keep accounts there. Currently, the bank is supervised by five cardinals, headed by the Vatican secretary of state. It said the bank's customer due diligence measures were lacking in some areas, particularly concerning high-risk transactions. And it found fault with the Vatican's procedures to report suspicious financial transactions. One area singled out for improvement was in putting into operation UN anti-terrorism measures, which require the Vatican keep a list of terror suspects and show how it can freeze and confiscate terrorist assets. Pope Benedict XVI has said he wanted the Vatican's finances to follow international principles, saying peace in the world today is threatened by terrorism and an improper use of the global financial system.