A senior Catholic prelate arrested last month used his influence at the Vatican to provide private, illegal financial services for rich friends, Italian investigators say in a judicial document.
They say Monsignor Nunzio Scarano, who is the target of two Italian investigations and had accounts at the Vatican bank, engaged in "totally private, illegal activity which was also aimed at serving outsiders".
Scarano was arrested in Rome on June 28 along with a self-styled financier and a member of Italy's secret services and accused of taking part in a plot to smuggle €20 million (£17.2m) into Italy from Switzerland.
Reuters has obtained the papers in which magistrates in Rome had asked a judge to order his arrest.
Scarano's lawyer, Silverio Sica, denied the accusations. "They don't have any evidence to prove all of this. These are just suspicions".
Pope Francis, who has made cleaning up the Vatican a goal of his papacy, has set up a commission of inquiry to reform its bank. He said he is forming a commission of lay experts to help overhaul the Holy See's economic and administrative departments.
Account holders at the Vatican bank, officially known as the Institute for Works of Religion (IOR) and which has been plagued by scandal, are obliged not to let them be used, even indirectly, by third parties.
Scarano, a former banker who became a priest aged 35, worked as a senior accountant in the Vatican's central financial administration office, the Administration of the Patrimony of the Holy See, or APSA.
The magistrates say Scarano, who worked at APSA for 22 years, offered his friends "a series of services ... in the area of financial transactions, in particular when there was a need or a request for them to remain secret".
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