Vatican Bank corruption probe may widen

The Vatican's attempt to contain the fallout of murky financial dealings at he Vatican bank, known formally as Institute for the Works of Religion, has suffered another blow.

According to Vatican officials, an investigation into suspicious transactions at the bank might widen to include "additional individuals" after the arrest of a senior cleric last month, on suspicion of trying to smuggle cash.

Nunzio Scarano, a priest who doubled as a financial analyst for the Vatican, was arrested along with a financial broker and a former secret service police officer. According to Rome's prosecutor, the trio had tried to smuggle tens of millions of euros across Europe using a private plane in July 2012.

Though Scarano has denied any wrongdoing, investigators were looking at  transactions from two accounts Scarano held at the Vatican bank, a personal account and the other used for donations.

The latest developments come with the tiny city-state facing increasing pressure to clean up its finances.

Italian prosecutors have been conducting an investigation into the Vatican bank.

Though two top officials at the bank resigned earlier this month, Vatican did not link the resignations and recent arrests, as it stressed the need to accelerate efforts to repair the bank's reputation.

Pope Emeritus Benedict, had hired German lawyer, Ernst von Freyberg to head the Vatican bank and clean up its finances, earlier this year.  Working with consultants from Promontory Financial Group, he is reviewing all client relationships and the bank's anti-money laundering procedures.

Scarano had already been suspended from his post as a Vatican accountant when he was arrested.

About a week following his arrest, on 9 July, the Vatican Promoter of Justice, froze all assets connected to Scarano. The Vatican said in a press release, those suspicious transactions, could involve additional suspects.

In addition to the ongoing investigation, a review of the Vatican Bank includes its anti money laundering procedures, including how they could be improved. The restructuring process got under way in May 2013 and would be expected be completed by the end of this year.