From ABC NEWS:
Italian prosecutors launched an investigation into the Vatican bank's top executives on Tuesday for allegedly violating anti-money laundering legislation. They ordered the seizure of 23 million euros belonging to the the Istituto per le Opere di Religione (IOR) and opened an inquiry against chairman Ettore Gotti Tedeschi and another top executive.
According to earlier reports in the Italian press, investigators suspect that Italian tax residents are using transfers of money through the IOR, which has special Vatican offshore status, to hide fraud and tax evasion.
The Vatican secretariat of state, which heads up the Vatican administration, denied any wrongdoing by IOR, saying in a statement that it was "perplexed and astonished" at the investigation.
The appointment of Gotti Tedeschi, an expert in the ethics of finance, was greeted at the time as a move towards greater transparency at the IOR.