The Vatican said in a statement Wednesday that Pope Benedict would issue a so-called apostolic letter on combating financial crime, money laundering and the funding of terrorism. The Holy See would create a financial information authority.
The Vatican bank, formally known as the Institution for Religious Works (IOR), has been under investigation for suspected violations of European Union money laundering rules since September. It denies any wrongdoing.
The IOR primarily manages funds for the Vatican and institutions around the world such as charity organizations and religious orders of priests and nuns.
Finance police have frozen 23 million euros of the IOR's funds held in an account in an Italian bank in Rome after authorities deemed that two transactions were suspicious.
One was a transfer of 20 million euros to a German branch of a U.S. bank and the other was 3 million euros transferred to an Italian bank.
The Vatican said it had simply transferred its own money between its own accounts and denied any wrongdoing.
Under Bank of Italy money laundering rules, foreign banks operating in Italy, including the IOR, must provide detailed information about the origins of funds they transfer.
(Writing by James Mackenzie; editing by Ralph Boulton)