By Philip Pullella
VATICAN CITY (Reuters) - Reports of suspicious financial activity in the Vatican reached a six-year low in 2018, an internal watchdog report showed on Tuesday, continuing a trend officials said showed reforms were fully embedded.
The annual report by the Vatican's Financial Information Authority (AIF) also showed that Vatican's cooperation with international financial regulators to fight fraud and money laundering had increased nearly six-fold in the same period.
"I think it's fair to say that a fully functioning system has been implemented and achieved," Rene Bruelhart, a Swiss lawyer and anti-money laundering expert who has headed the AIF since 2014, told a news conference.
The report showed that 56 Suspicious Activity Reports (SARs) were filed with the authority in 2018, down from a peak of 544 in 2015.
Eleven were passed on to the Vatican's investigating magistrate. They involved suspicion of international fraud, fiscal fraud or market abuse.
The trial of a former head of the Vatican bank and an Italian lawyer on charges of money laundering and embezzlement began last year and is still in progress.
For decades before reforms were implemented, the bank, officially known as the Institute for Works of Religion (IOR), was embroiled in numerous financial scandals as Italians with no right to have accounts opened them with the complicity of corrupt insiders.
Pope Francis, who has made cleaning up Vatican finances a priority and given Bruelhart wide powers, considered closing the IOR when he was elected in 2013.
Hundreds of accounts have been closed at the IOR, whose stated purpose is to manage funds for the Church, Vatican employees, religious institutes, or Catholic charities.
Asked about resistance to change, Bruelhart, in an apparent reference to the pope's backing, said: "The support on the political level from superiors has been tremendous, otherwise it would not have been possible to bring these reforms forward in such a short period of time, especially from a Vatican perspective."
The AIF carried out an on-site inspection of IOR in 2018 to see it was complying with anti-money laundering legislation and the outcome was "substantially positive", the report said.
In 2017, Italy put the Vatican on its "white list" of states with cooperative financial institutions, ending years of mistrust. The same year, Moneyval, a monitoring body of the Council of Europe, gave Vatican reforms a mostly positive evaluation.
Not everything is rosy in the Vatican's financial departments, however.
Its economy minister, Cardinal George Pell, was found guilty of sexual abuse of minors in his native Australia in February and the post is vacant. Pell denies all wrongdoing.
(Reporting by Philip Pullella, editing by Ed Osmond)