Pope Francis pledged to reform the Curia and resolve the cloud over the Institute for Religious Works (IOR in Italian), commonly known as the Vatican Bank.  Earlier this week, the pontiff appointed a five-member commission to delve deeply into the IOR’s operations, but Italian authorities pressed on with their own investigations.  Earlier today, they arrested a suspended accountant from a Vatican financial group after he tried to smuggle €20 million ($26 million) into Italy from Switzerland:

A Vatican official already under investigation in a purported money-laundering plot involving the Vatican bank was arrested Friday in a separate operation: Prosecutors allege he tried to bring 20 million euros ($26 million) in cash into Italy from Switzerland aboard an Italian government plane, his lawyer said.

Monsignor Nunzio Scarano, a recently suspended accountant in one of the Vatican’s main financial departments, is accused of fraud, corruption and slander stemming from the plot, which never got off the ground, attorney Silverio Sica told The Associated Press.

He said Scarano was a middleman in the operation: Friends had asked him to intervene with a broker, Giovanni Carenzio, to return 20 million euros they had given him to invest. Sica said Scarano persuaded Carenzio to return the money, and an Italian secret service agent, Giovanni Maria Zito, went to Switzerland to bring the cash back aboard an Italian government aircraft. Such a move would presumably prevent any reporting of the money coming into Italy.

The operation failed because Carenzio reneged on the deal, Sica said.

Zito, nevertheless, demanded his 400,000 euro commission. Scarano paid him an initial 200,000 euros by check, which Zito deposited, Sica said. But in a bid to not have the second check deposited at the bank, Scarano filed a report for a missing 200,000 check, even though he knew Zito had it, Sica said.

Carenzio and Zito also were arrested Wednesday along with Scarano, Sica said.

Italian authorities already had Scarano under investigation.  Scarano worked for APSA, which is distinct from the IOR.  The Vatican suspended him once informed that Scarano had become a target of the investigation, and an hour or so ago released an official statement about his arrest:

Vatican City, 28 June 2013 (VIS) – This morning, Fr. Federico Lombardi, S.J., director of the Holy See Press Office, issued the following communique regarding the arrest, in Italy, of Msgr. Nunzio Scarano, director of accounting analysis service of the Administration of the Patrimony of the Apostolic See (APSA), in the context of an investigation on corruption and fraud.

“As has been made known in the past few days, Msgr. Nunzio Scarano was suspended from his position at the APSA over a month ago, as soon as his superiors were informed that he was under investigation. This is in compliance of the Regulations of the Roman Curia, which require the precautionary suspension of persons against whom prosecution has been initiated.”

“The Holy See has still not received any request from the competent Italian authorities on the matter, but has confirmed its willingness to cooperate fully.”

“The competent Vatican authority, the AIF (the Vatican Financial Information Authority), is following the issue in order to take, if necessary, appropriate measures within its competence.”

The arrest overshadows the significant and dramatic steps that Francis took this week to produce real reform within the Vatican’s financial institutions.  The appointment of an outside commission to investigate the activities of the IOR includes a familiar American face in Catholic laity, as the Financial Times reports:

Pope Francis has signalled his determination to shake up the troubled Vatican bank with the appointment of a five-member commission to review the conduct of the scandal-hit institution.

The Vatican said Pope Francis set up the pontifical commission “to get to know better the judicial position and the activities” of the Vatican bank, known as the Institute for Religious Works. …

The commission comprises three cardinals – Raffaele Farina, Jean Louis Pierre Tauran and Juan Ignacio Arrieta – as well as Father Peter Wells, a Vatican top official, and Mary Ann Glendon, a Harvard law professor and former US ambassador to the Holy See.

Mary Ann Glendon, readers may recall, rebuked Notre Dame in 2009 for awarding pro-abortion President Barack Obama an honorary degree as part of their invitation to speak at their commencement that year, withdrawing from the event and refusing an award the university planned to award her as well. Her inclusion on this panel affirms the commitment that Francis’ election appeared to promise, and provides a clear, outside look at the murky activities within the IOR.

National Catholic Register also emphasizes that this is a personal project for Francis:

The appointment of a new pontifical commission to advise Pope Francis about the Institute for Religious Works, usually called the Vatican Bank, was desired expressly by the Pope, local sources say.

This was “Pope Francis’ personal choice. It strays from the usual dynamic through which these decisions are taken,” a Vatican official, speaking under the condition of anonymity, told Catholic News Agency on June 26.

The possibility of a reform or even of an abolition of the Institute for Religious Works was raised during the pre-conclave meetings of cardinals in March.

Once elected pope, Francis followed some of the suggestions that emerged during the pre-conclave meetings. One example is the so-called “advisory board” of eight cardinals he will first meet with in October.

“The appointment of the commission,” explained the official, “is in order to understand if the Institute for Religious Works fulfills the mission of the Church in its current structure or if it needs to be reformed.”

This is why the Pope issued the chirograph, an official document of Medieval origins. Through it, he appointed a “board” of five members to report to him about “the legal position and the activities of the institute” in order to “harmonize the institute with the universal mission of the Apostolic See.”

Francis himself emphasized the need for reform in his adoption of the name of St. Francis of Assisi for his pontificate, with its obvious theme of rebuilding the Church.  Scarano’s arrest may be the first of a series of painful headlines for the Vatican as this reform effort continues, but that pain will be a necessary and hopefully temporary stage through which real reform must pass.