The Vatican said Friday it had frozen funds belonging to a senior cleric at the center of a suspected money smuggling operation, and could open investigations into other individuals.
Monsignor Nunzio Scarano, who has close links to the Vatican Bank, was arrested last month, accused of plotting to bring millions of euros in cash into Italy from Switzerland for rich friends.
The case was the latest in a series of scandals to tarnish the Catholic Church's image.
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Details of the investigations, including police wiretaps and allegations of plots to smuggle the cash past customs, were also seen as a particular embarrassment for Pope Francis who has focused on the Church's duty to care for the poor since his election in March.
The Vatican's chief judicial official had ordered the freezing of Scarano's own funds in the Vatican Bank, the tiny city state said in a statement.
"The inquiries may also be extended to other persons," it said, without giving details.
The bank, known formally as the Institute for Works of Religion (IOR), had appointed U.S. financial consultancy Promontory Financial Group to conduct a review of all accounts potentially affected, and was cooperating with the investigation, the statement added.
Scarano, a former senior accountant in the Holy See's financial administration, was arrested with Giovanni Zito, an Italian secret service agent, and financial broker Giovanni Carenzio.
They have been accused of plotting to bring in 20 million euros ($26.08 million) for Scarano's rich friends in the shipping industry in the southern city of Salerno.
Although the Vatican bank has not been directly implicated in the case, it is already caught up in a separate investigation into suspected money laundering.
Scarano, currently held in Rome's Queen of Heaven jail, is also under investigation in another case linked to his accounts in the Vatican bank.
Two of IOR's top managers resigned earlier this month in the wake of Scarano's arrest and prosecutors are considering seeking to have the two, former director Paolo Cipriani and former deputy director Massimo Tulli, sent to trial.
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