Vatican Inc.

Pope Benedict's resignation shocked the Catholic Church and left the Vatican in disarray. His successor will face many challenges, from recurrent sexual scandals to concerns about financial impropriety at the Vatican's own bank, the IOR or Institute of Religious Works.

In 2011, Al Jazeera investigated allegations that the IOR had been involved in money laundering and examined Pope Benedict's plans for cleaning up the secretive system. With many of those reforms having fallen short and the Vatican's finances still under a cloud, the next Pope might benefit from watching this report once again.

Every Sunday worshipers crowd the Saint Peter's colonnades in square and from its balcony the Pope imparts a sacrament and the latest behavioral guidelines. Over one billion Catholics look to the pontiff for guidance and donate their money to the Catholic Church. A large portion of this money makes its way to the Vatican and into the vaults of the IOR, the Institute for Religious Works, the Vatican's Bank.

The IOR is the vehicle through which thousands of charitable and religious initiatives around the globe are financed. In the recent past, Italian state prosecutors placed the bank under investigation for suspected money laundering. Twenty three million Euros in Vatican funds were seized representing only a fraction of suspect transactions now being scrutinized. IOR president, Ettore Gotti Tedeschi, was also placed under investigation and a huge financial scandal now threatens to envelop the church. For many Catholics, it has the disturbing echoes of another scandal of 30 years ago, the infamous "Banco Ambrosiano affair" and some now fear that history may be repeating itself.

President Ettore Gotti Tedeschi was questioned in order to clarify the situation, but after the questioning the prosecution thought that they had not received satisfactory answers. It is surprising that even the president of the IOR could not find a way to clarify the circumstances.

The Institute for Religious Works is located behind the walls of the Vatican City state and inside the massive tower build by Niccolo V. The bank was founded in 1942 by Pope Pius XII with the purpose of safe keeping the Vatican's vast assets in capital and real estate. The IOR doesn't allow everyone to open accounts. There are specific regulations allowing only religious organizations or members of clergy to do so.

The IOR is administered by industry professionals under the supervision of the Council of Cardinals, but because the IOR has only one central branch inside the Vatican, it has to use other banks outside the city state to move its funds around. However, the names of its accounts holders are kept secret and transactions bare no other identification than that of the IOR. This means the origins of any deposit coming into an IOR account are wiped from the record before the funds are moved out to the international banking system and that, say critics, makes money laundering all too easy.

Generally, the profits that the IOR makes during a year's worth of financial operations and from the deposits made, are given to the Pope for charitable works that are carried out worldwide. The amount corresponds roughly to 70 or 80 million Euros every year.

Inevitably, this huge flow of cash, much of it untraceable, has attracted the attention of investigators. The latest probe began in the hills around Rome in late 2008 when Father Evaldo Biasini, treasurer of the Congregation of the Missionaries of the precious blood, answered his mobile phone.