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Forbes
17-05-2025
- Business
- Forbes
Why Pope Leo Can Skip FATCA, But Not FBAR
There has been a lot of discussion about the possible U.S. tax obligations for Pope Leo XIV, the first U.S. citizen Pope. Some of the assertions have generated confusion, leaving key U.S. tax concepts insufficiently addressed. One of the biggest areas of misunderstanding has been the Pope's possible FBAR reporting (FinCEN Form 114) versus FATCA reporting (IRS Form 8938) obligations for financial accounts at the Vatican Bank. Some of the discourse has been conflating the FBAR requirements under the Bank Secrecy Act with those of FATCA Form 8938 requirements under the U.S. tax laws. It is important to distinguish between the two. This article explains why, notwithstanding his vow of poverty with the Order of St. Augustine, Pope Leo XIV might face a legal duty under the FBAR rules to disclose financial accounts at the Vatican Bank, but need not report them under the mandates of FATCA on Form 8938. The holdings of the Vatican Bank are significant, totalling €5.4 billion in assets and serving 12,361 clients according to its 2023 Annual Report. The FBAR (FinCEN Form 114) is mandated under Title 31 of the U.S. Code, the Bank Secrecy Act. The BSA was enacted in the 1970s to fight terrorism, tax evasion and other financial crimes. It is not part of the Internal Revenue Code and does not impose any tax. Instead, it is an informational form requiring U.S. persons to report any 'financial interest in or signature authority over' foreign financial accounts if the aggregate value of all such accounts exceeds $10,000 at any point in the calendar year. The FBAR rules provide that having control over disposition of assets in a foreign financial account by direct communication with the financial institution is signature authority, sufficient to trigger FBAR filing obligations if the threshold is met. It is immaterial that one lacks ownership of the account. Additionally, the FBAR reporting obligation applies regardless whether the person is required to file a U.S. income tax return. All of this makes sense since the aim of FBAR is transparency about foreign financial accounts and not taxation. FATCA, enacted in 2010, is part of the U.S. tax laws, under Title 26 of the U.S. Code (Title 26 embodies the U.S. Internal Revenue Code). FATCA information reporting is carried out by completing IRS Form 8938 to report an individual's ownership of so-called 'specified foreign financial assets' that meet a certain threshold. It is a different regime altogether from the BSA and its concomitant FBAR filing obligations. FATCA, like FBAR, is aimed at offshore asset transparency, but has crucial differences. First, foreign financial assets that must be reported on the Form 8938 are only those assets in which the person has a beneficial ownership interest. While signature authority alone doesn't trigger Form 8938 reporting, it serves as an absolute and independent linchpin for FBAR disclosure. Second, Form 8938 is mandated only if the U.S. person is required to file a U.S. tax return and the specified foreign financial assets exceed certain thresholds. FBAR, by contrast, is not tied to a tax return. It must be filed even if the individual has no tax return filing obligation and even if he earns no income. These distinctions are vital in the case of Pope Leo XIV. When he was in his 20's, Pope Leo XIV took a vow of poverty as part of the Order of St. Augustine. The vow he took is very strict and means that he does not own personal property or assets; all are turned over to the Order. Additionally, any income he may earn or gifts he may receive are also turned over to the Order, a tax-exempt entity. This vow of poverty may exempt him from the need to file a U.S. tax return altogether even though as a general matter, U.S. persons living and working in foreign countries must file a tax return. Filing in the typical case is required, even if the foreign earned income falls below the special exemption amount for Americans overseas. Furthermore, the vow would mean that Pope Leo has no foreign financial assets in which he holds a beneficial interest. Accordingly, for these reasons, the Pope would have no duty to file FATCA Form 8938. The Pope's possible duties under FBAR are completely different. The requirement to file FBAR arises independently from ownership of any assets or earned income. It arises from control—specifically, signature or other authority over foreign financial accounts. The pressing issue is not whether Pope Leo XIV personally owns accounts at the Vatican Bank, formally known as the Institute for Works of Religion, but whether he has "signature or other authority" over the IOR accounts within the meaning of the FBAR regime. Under FBAR regulations, signature authority exists when an individual can control the disposition of assets in a financial account by direct communication (whether in writing or otherwise) with the institution maintaining the account. The Holy See is the Catholic Church's governing authority, led by Pope Leo, and is recognized as a sovereign entity. In 2022, Pope Francis mandated that all Holy See assets be consolidated in the Vatican Bank. This is a policy inherited by Pope Leo and it is this centralized control which raises questions whether the Pope's role equates to a de facto signature authority over IOR accounts. As the sovereign head of the Vatican and supreme authority over Vatican entities, including its financial institutions, Pope Leo XIV arguably exercises such control. Some recent discussions that have speculated on the Pope's potential U.S. tax obligations, seem to have a misunderstanding or misapplication of the relevant legal frameworks. Confusing FBAR and FATCA is a common, but very significant error. It is an error that can result in very harsh penalties as well as the stress of audits and an open-ended statute of limitations if the Form 8938 remains unfiled when otherwise required. Pope Leo XIV's vow of poverty likely shields him from income tax filing and FATCA's Form 8938 requirements. However, his potential control over the Vatican Bank raises important questions about FBAR filing duties. Since the Pope is a U.S. citizen and potentially exercises signature authority over foreign financial accounts that undoubtedly exceed $10,000 in aggregate, he may well have an FBAR obligation, regardless of his personal lack of wealth. In this era of financial transparency, even a pontiff may not be exempt from the long arm of U.S. financial reporting laws. The intriguing case of Pope Leo and his possible U.S. reporting obligations underscore the vast reach of FBAR and FATCA. While not everyone can be the Pope, this situation is a startling reminder that all U.S. citizens and residents must abide by FBAR mandates. It also serves as a warning to foreign employers who do not want company accounts to be disclosed to the IRS, that they should re-think giving U.S. persons control over such accounts. Stay on top of tax matters around the globe. Reach me at vljeker@ Visit my U.S. tax blog
RTÉ News
14-05-2025
- Business
- RTÉ News
Prophets & Losses: Challenges continue for the Vatican Bank
The Vatican Bank – or the Institute for the Works of Religion, as it's officially known – has long represented at the heart of the Catholic Church's financial might. As of the end of 2023 – the most recent data we have on the bank's balance sheet – it held assets worth €5.4 billion. That would include the church's money, but also the deposits of its customers – including priests and bishops. And much of that money would have been invested in the likes of bonds, stocks and shares and securities – all following what the bank calls 'faith consistent investing', which is their attempt to only invest in things that align with the church's social doctrine. That includes environmentally-friendly companies and projects that show a respect for human life. As of 2023 the bank also held around €37m worth of gold – which was mainly left with the US Federal Reserve for safe keeping. Meanwhile it had around €10.7m worth of medals and precious coins, which were held in the Vatican Bank vaults. And, from all of this, it made a profit of more than €30.5m in 2023. It should be said, though, that the bank's assets do not represent the total net worth of the church – far from it. For example there's a separate entity called the Administration of the Patrimony of the Apostolic See – or APSA for short – which manages most of the Vatican's property interests. Its importance has grown in recent years and, as of 2023, it controlled around 5,000 real estate units, worth around €2.7 billion. On top of that you also have all of the relics, sculptures, paintings and jewelry that is in Vatican City, and other places around the world. All of this together would add billions more onto the church's balance sheet – beyond what we know about the Vatican Bank's holdings. But the fact that we know much at all about the bank is a relatively new thing, isn't it? Yes – the Vatican Bank only started to publish annual reports in 2013. Before then there was very little public information about what the bank was in control of and what it was doing with the assets it had. And that was very much the aim of Pope Pius XII when he established it in the 1940s – he wanted to add an extra layer of secrecy to the Vatican's finances. That was particularly important in the context of the ongoing war - the Vatican was essentially sitting in the middle of the Allies and Axis powers, and one of the few states able to do business with both. And from the outset the Vatican Bank wasn't answerable to any regulations from any other country, it didn't publish annual results and it didn't pay any taxes. And while it was only meant to take on members of the church as customers, this relatively unique set up meant it became very attractive to wealthy Italian laymen too – especially those who wanted to keep a low profile on some of their business dealings. As a result, controversy and suspicion has hung around the bank from its inception. Tell me about some of the controversies... There's probably two big ones in its history – one involving Michele Sindona, and the other involving Roberto Calvi and Banco Ambrosiano. Michele Sindona was an Italian banker who was also good friends with Giovanni Battista Montini – who went on to become Pope Paul VI. As a result, when the Vatican Bank was looking to diversity its assets and investments in the 1960s, it took Sindona on as a financial advisor. But Sindona wasn't the pencil-pushing banker type – he was also involved with the subversive masonic lodge Propaganda Due, and was working with the likes of the American and Italian Mafias – including the Gambino family in New York – helping them to launder drug money and avoid tax. Eventually, that would often see him transfer Mafia money to Switzerland via the Vatican Bank as a way of evading authorities and regulators. Sindona also spent a lot of time and money buying up banks of his own to create a network to funnel his money through - but when one of his US companies collapsed in 1974, his whole empire fell apart. That exposed some of the dealings the Vatican Bank was a conduit for – and ended up costing them tens of millions of dollars in the process. After his empire's collapse Sindona had the lawyer tasked with investigating his business killed – for which he was eventually given a life sentence in 1985. Days later he ingested poison and died. What about Roberto Calvi? He was managing director of Banco Ambrosiano - which was a Catholic Italian bank first established in the late 19th Century, which grew to at one stage become the country's second biggest lender. The Vatican Bank became Banco Ambrosiano's largest shareholder – and the workings of two became quite closely linked for a time. Not least because the then president of the Vatican Bank, Archbishop Paul Marcinkus – who hailed from Chicago - was friends with Roberto Calvi. His work with the Vatican Bank earned him the nickname 'God's Banker' – but, like Sindona, he was also one of the mafia's bankers, as well as a member of the Propaganda Due masonic lodge. And like Sindona, Calvi often used the Vatican Bank as an intermediary in the large, illegal transactions he was making on behalf of the Mafia. The Italian central bank eventually became suspicious of what he was doing – and launched an investigation in the late 1970s, which identified billions of lire worth of illegal transactions. And when they dug even deeper, they found massive debts of as much as $1.5 billion – in the bank. Bear in mind this was 1982 – so it's the equivalent of around $5 billion today. And there was correspondence between Calvi and people in the Vatican which showed that senior figures in the church were aware of the kinds of transactions it was involved in. Following the bank's collapse the Vatican agreed to pay more than $220m to Banco Ambrosiano's creditors in recognition of its "moral involvement" in the collapse – though it never took full responsibility for what went on. Calvi, meanwhile, fled Italy on a false passport – but just over a week later his body was found hanging under Blackfriar's Bridge in London. He had stones and thousands of dollars of cash in his pockets. It was initially deemed a suicide but an Italian court later ruled it was a murder – the theory being that the mafia had him killed in revenge for the money he had lost them through the collapse of his bank. The president of the Vatican Bank, Archbishop Marcinkus, meanwhile, who had worked with both Calvi and Sindona, didn't step aside from his role until 1989. Seven years after Banco Ambrosiano's failure. Italian authorities did issue a warrant for his arrest in 1987 but he claimed diplomatic immunity and waited out in Vatican city for a time, until the warrant expired. He eventually died in 2006. It's like something out of a movie... Well you won't be surprised to learn that there have been multiple movies and books made about these events – be they retellings of the events or theories about what else happened with the players involved. In fact if the story sounds familiar it may be because you've seen Godfather III; it used the dealings of Calvi, Marcinkus and the Vatican Bank as the basis for that film's central plot, though the names are changed. In his telling, Francis Ford Coppola also included the conspiracy theory that Pope John Paul I was assassinated because he was set to reform the Vatican Bank and expose the corruption within. There have long been questions around his death, which came just 33 days after he was elected pope, but there's never been any compelling evidence that he was murdered. So did Archbishop Marcinkus stepping aside bring an end to the Vatican Bank's controversies? Not at all – there have been many since then, albeit at a lower level than what we saw with Sindona and Calvi. As its unique structure of minimal oversight and no taxes continued for many years, it remained an attractive offshore tax haven for the rich for even after the peak of its controversies. It was investigated for money laundering in 2010 as a result of some suspicious international transactions, for example. Then in 2013, a senior accountant at the bank – Monsignor Nunzio Scarano - was arrested for trying to fly €20m from Switzerland back to Italy. He had been under investigation by Italian authorities for a series of transactions where cheques he claimed to be church donations were recycled through the Vatican Bank. His arrest also led to the resignation of the bank's director and deputy director a few days later. The directors were found liable for mismanagement at the bank – while the monsigner was eventually given a three years sentence for corruption and defamation. Then in 2014, Vatican authorities flagged their suspicions around an investment in a property development in London – which ultimately lost the bank €200m. An investigation into that eventually led to a turn of events that really shook the church, which was the arrest of cardinal Giovanni Angelo Becciu, by Vatican authorities, in 2019. He had been in charge of the management of the Holy See's funds between 2011 and 2018 – but was eventually convicted of embezzlement and fraud in 2023. Wasn't fixing this a priority for Pope Francis? Yes – and while all the recent talk of his legacy didn't focus much on this, his attempts to reform the Vatican Bank were a significant part of the work he undertook in his time as pope. In truth the attempt to reform the bank was started by Pope Benedict – he was the one that set them on the path to publishing annual reports, for example. And to a degree Pope Francis had little choice but to try to tackle problems at the bank – the case hat led to Monsignor Scarano being arrested happened just a few months into his tenure. But he did make huge efforts to reform it all the same. For example, following a review of its operations, he closed a huge number of dormant accounts the bank held, and forced many of its branches to send their assets back to the Vatican Bank itself in an attempt to simplify and streamline its structure, and make its dealings more transparent. He also took control away from the likes of cardinals and put it into the hands of people with actual financial expertise – which was a huge issue with the bank from its inception. Archbishop Marcinkus, for example, had absolutely no financial training when was put in charge of the bank in the early 1970s. To try to deal with that he was sent off to a six week crash course in Harvard – before being handed control of billions of dollars worth of assets. After the corruption revelations in 2013 and 2014, Pope Francis also took away the bank's responsibilities for the church's property assets – giving it instead to APSA. He also brought the bank into the European Union's Single Euro Payments Area – or SEPA – which effectively opened it up to more external oversight and regulation. As a result of that the reputation of the Vatican Bank has improved dramatically. There are now more international banks willing to work with it than was the case just over a decade ago, and just last month its watchdog said that complaints of suspicious activity involving the bank had fallen by a third in 2024. At the same time, though, there remains an underlying issue with the church's finances. It had an operating deficit of €83m in 2023, and its pension fund is also said to be facing an ever-growing gap. That means there is still a lot of work to do by the bank - and other parts of the Vatican's financial system – to put the church on a steady footing. But the continued reform of the bank under Pope Leo is seen to be key to that. Many argue that the fall in donations the church has seen in recent years is linked to the fact that people have little trust that their money will be well-handled and well-spent – and it may take time before their faith is restored.
Mint
09-05-2025
- Politics
- Mint
Robert Francis Prevost elected as Pope Leo XIV; netizens wonder ‘Will there be a female, African or Black Pope'
Cardinals at the Papal conclave on Thursday elected Robert Francis Prevost, 69, as Roman Catholic pontiff, the first ever pope from the US. White smoke poured out from the Sistine Chapel and the bells of St. Peter's rang out, indicating the successor of Pope Francis has been decided, which took two days to reach the consensus. He chose the name of Leo XIV for his pontificate. Netizens are curious to know whether there will be a female or African or black pope. 'May peace be with you,' the new pope said a joyous crowd waving flags. 'To all people, wherever they are, to all peoples, to the whole Earth, peace be with you. Help us, and each other, to build bridges through dialogue, through encounter, to come together as one people, always in peace,' he added, AFP reported. One of the users said, 'An American Pope. I hope he promotes unconditional love and service, especially towards the poor and marginalized. Let's pray.' Another stated, 'A new chapter begins with hope and balance at its heart.' "There will never be an African or black pope ? Or we are not ready as a world? questioned one of them. 'Congratulations Pope Leo XIV! May Christ surround you with guidance and humility as you lead the people into his grace,' said a fourth. Another asked, 'will there ever be female pope??' Others congratulated him and wished a luck. Pope Francis, who died last month on April 21, had stated he wanted to lead a 'poor church for the poor,' opened conversations on topics like the role of women, including the possibility for remarried divorcees to receive communion. He also advocated for financial reforms and regulations to align the Vatican Bank with international financial standards. Additionally, he spoke out in support of victims of sexual abuse scandals and to safeguard the planet through his encyclical Laudato Si', Bloomberg reported. 'What excitement, and what a Great Honor for our Country. I look forward to meeting Pope Leo XIV. It will be a very meaningful moment!' Trump stated. Zelensky congratulated Leo XIV, wishing him 'wisdom, inspiration, and strength—both spiritual and physical' in fulfilling his noble mission. 'Ukraine deeply values the Holy See's consistent position in upholding international law, condemning the Russian Federation's military aggression against Ukraine, and protecting the rights of innocent civilians. At this decisive moment for our country, we hope for the continued moral and spiritual support of the Vatican in Ukraine's efforts to restore justice and achieve a lasting peace,' he added.
RTÉ News
08-05-2025
- Entertainment
- RTÉ News
Beyond Conclave: 10 other movies that feature the Vatican
If you've seen Conclave, Edward Berger's excellent political thriller, you'll have some idea of what goes on behind the scenes at the secretive papal conclave. So with all eyes on Rome this week as cardinals meet to elect a successor to Pope Francis from behind the closed doors of the Sistine Chapel, here's a look at five other films set in or around the Vatican... THE GODFATHER PART III (1990) While the first installment of Francis Ford Coppola's magnum opus was set in New York City, and the second largely in Sicily, much of Part III was based in Rome - particularly around the Vatican City, as Michael Corleone becomes involved in nefarious business dealings involving the Vatican Bank. THE DA VINCI CODE (2006) & ANGELS AND DEMONS (2009) Both of Dan Brown's novels were adapted for the big screen in 2006 and 2009, and while both had scenes set within the Vatican - Angels & Demons opens with the death of a pope and preparations for a conclave - the church unsurprisingly denied Ron Howard permission to film there. Instead, other venues around Rome doubled for interior scenes, while Winchester Cathedral was a stand-in for the Vatican in The Da Vinci Code. MISSION: IMPOSSIBLE III (2006) The world's most famous Scientologist breaking into the seat of the Catholic Church? It happened in M:I3, when Tom Cruise donned a cassock to go undercover in the Vatican - which was really Reggia di Caserta near Naples. However, some exterior shots were filmed in St. Peter's Square. ROMAN HOLIDAY (1953) Of course one of the most timeless Rome-set films ever made had to feature the Vatican in some way. St. Peter's Basilica features in the film's opening sequence, while the nearby Castel Sant'Angelo also features during a scene where Audrey Hepburn dances with Gregory Peck before a brawl breaks out. EUROTRIP (2004) Bet you weren't expecting this one. If the Church doesn't allow some of the world's most esteemed filmmakers to shoot within the Vatican City, you can bet they didn't let the makers of this 2004 goofy 'teen sex comedy'. Nevertheless, a sequence is set within the Vatican when main characters Scott and Cooper break into the Pope's private quarters in the midst of a conclave. THE TWO POPES (2019) Well, the clue is in the title: of course the Vatican is going to feature in some way. In Fernando Meirelles's 2019 drama, we witness a fictionalised discussion between Pope Benedict XVI (Anthony Hopkins) and the then-Cardinal Bergoglio (Jonathan Pryce) in the wake of the Vatican leaks scandal. Much of the film is set within the walls of the Vatican, although the actual filming locations were spread across Rome and a full-scale replica of the Sistine Chapel was constructed at Rome's Cinecittà Studios. MADAGASCAR 3: EUROPE'S MOST WANTED (2012) It's not just live action movies that feature the Eternal City; in Madagascar 3, a group of intrepid animals find themselves pursued across Europe as they attempt to get back to New York City. One scene features King Julien, the ring-tailed lemur, kissing the Pope's ring in the Vatican. LA DOLCE VITA (1960) Fellini's best film? La Dolce Vita is certainly one of the iconic Italian director's most celebrated works. Set in Rome, one sequence heavily features the Vatican as jaded journalist Marcello pursues a woman up the 551 steps of St. Peter's Dome, which overlooks the magnificent square. As with The Two Popes, a replica of the dome was built at Cinecittà Studios. SPECTRE (2015) It only took fifty years for film's most famous spy to land in Rome. much of Spectre was shot in the Italian capital, while a thrilling car chase through its streets passes up the cobbled Via della Conciliazione, with St. Peter's Basilica looming majestically in the background.
NZ Herald
08-05-2025
- Politics
- NZ Herald
Religious studies expert says latest conclave most open election for pope in long time
'Each cardinal has a small piece of paper on which they can write the name of one of their number who they think should be pope,' he said. 'There is a total blackout because they do not want cardinals talking on their cellphones to the media. 'They keep doing that four times a day until they have a pope.' During the 2013 conclave, Pope Francis was elected after five rounds of voting. The longest conclave came in the 13th century, when it took three years to elect Pope Gregory X. Lineham said the cardinals would be looking for someone who could manage the global church and efficiently run the Vatican. 'Technically, the pope is a monarch. A kind of king of the church,' he said. 'If you can't keep the wheels of the Vatican turning, keep raising money for the church, the whole thing will collapse. 'That is effectively while Benedict resigned in 2012. He proved incapable, even incompetent, at running the Vatican Bank, and then all the sexual abuse scandals. He just couldn't do it.' Among the electors at this year's conclave are Cardinal John Dew, former Archbishop of Wellington. There are also two cardinals from the Pacific Islands - Cardinal John Ribat from Papua New Guinea and the recently appointed Cardinal Soane Patita Paini Mafi from Tonga. Lineham said Pope Francis appointed at least two-thirds of the cardinals. 'He wanted the things he cared about to be reflected in the cardinals. He also had a big think about the representation of the worldwide church,' he said. Lineham said the popes of the last 50 years have turned into global figures. 'They are really spectacularly public about travelling all around the world. 'Because of that, we can assume they are really important figures. Although they have no formal power, [there are] 1.4 billion Catholics.' He estimated the cardinals will have come to a conclusion by Friday night. 'It may take one more vote than Francis, but people pretty quickly get realistic.' Lineham said this was the most open conclave in a long time. 'Because of all these new cardinals. There will be people from the south who want another person out of the Italian European domination of the past thousand years,' he said. 'I find it very difficult to read, let alone the conservative v liberal debate.' Top contenders High-profile cardinals considered front-runners include Pietro Parolin, an Italian who serves as the Vatican's secretary of state and is known for his diplomatic skills. Peter Turkson, a Ghanaian known for relatively liberal views on social justice and human rights, could also be considered, as could Philippine-born Luis Tagle, an advocate for enhanced inclusivity. Turkson would be the first African Pope, if elected, and Tagle the first from Asia. On the other end of the political spectrum, Raymond Leo Burke, a one-time archbishop of St Louis and an ardent critic of Francis, is also seen as someone who could make the cut. Burke would be the first ever US-born pope if he were to be named Francis' successor.
