The Institute for the Works of Religion (IOR), commonly known as the ‘Vatican Bank’, will publish its annual accounts online by the end of the year, the Holy See said today. The announcement was made by the IOR’s new president, Ernst von Freyberg, during a meeting with bank staff on Monday.

He said the bank’s transactions would be assessed by an international organisation, which would apply both the Vatican’s own new rules for financial disclosure and European banking standards.

Most of the nearly $7 billion managed by the bank doesn’t belong to the Vatican itself, but to religious orders, dioceses and Catholic organisations across the world. The bank, established in 1942 by Pope Pius XII, allows Catholic entities present in many countries to move money easily where it’s needed.  It is a privately held institution located inside Vatican City run by a professional bank CEO who reports directly to a committee of cardinals, and ultimately to the Pope. It operates as an offshore institution outside EU rules, and has no shareholders.

There have been accusations in the past that the bank has been used to recycle mafia money. In 2010 Roman magistrates froze $33 million which the IoR held in an Italian bank, claiming violations of transparency protocols. The Vatican denied the charges, and the money was released.

Pope Benedict XVI then began a series of reforms to make the Bank more transparent and accountable in line with international best practice.  Its head, Ettore Gotti Tedeschi, was removed, and a review carried out to ensure that there were no inappropriate account holders and that the movement of assets had a clear paper trail.

In 2012 Pope Benedict XVI issued a decree allowing outside auditors to examine the Vatican’s financial books, and created a Vatican watchdog, the Financial Intelligence Authority, to oversee its financial activities. And he brought in a Swiss lawyer, René Brülhart, with an outstanding  record of cleaning up other European banks.

Last year the Vatican  signed an agreement with Moneyval, the Council of Europe’s anti-money laundering agency, to ensure full compliance with international standards. Moneyval auditors were able to examine records of judicial and diplomatic cooperation, anti-money-laundering certifications, accountancy management letters, foundation registry records, and a host of other confidential legal documents — the first time that the Vatican has allowed such independent external scrutiny of its financial affairs.

Moneyval applauded the Vatican for “coming a long way in a short time” toward greater financial transparency, but  said more external oversight of the bank was needed. The Vatican agreed to put right the deficiences identified in the Moneyval evaluation, and will  submit to a new audit in July.

In February, shortly before his resignation, Pope Benedict also appointed a German, von Freyberg, as IOR’s president, to continue the reforms. The Vatican said von Freyberg, pictured, a member of the Knights of Malta, had “a vast experience of financial matters and the financial regulatory process”.

Brülhart recently travelled to the US to sign an agreement with the U.S. Financial Crimes Enforcement Network (FinCEN), a unit within the U.S. Treasury Department that tracks suspicious money flows.

The Vatican said the new agreement was meant to “foster bi-lateral cooperation in the exchange of financial information”, sharing with FinCEN information about suspicious transactions that could relate to money laundering or the financing of terrorism.