updated 12/20/2010 1:54:17 PM ET 2010-12-20T18:54:17

A judge has upheld the seizure of euro23 million ($30.2 million) in Vatican assets in a money-laundering probe involving the Holy See's bank, the second time the bank has been denied the return of the funds.

Italian authorities seized the funds in September as part of a probe into whether Vatican banking had violated Italian laws mandating transparency in money movement — a key weapon in the war against organized crime and political and business corruption.

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News reports quoted Judge Maria Teresa Covatta as saying the intended beneficiaries of the transactions from the Vatican bank account at a Rome bank were still unclear. The Vatican bank is formally named Institute for Religious Works, or IOR, in Italian.

Covatta said that nothing had changed in the way the Vatican guards the identity of its clients since its initial appeal in late October. She added that Italian authorities lack "the possibility of checking" the identities of the beneficiaries of clients receiving checks or fund transfers through Italian banks while IOR continues to conduct business in this way.

Court documents indicate that prosecutors have alleged that clergy might have been front men for corrupt businessmen and mobsters. The Vatican has blamed the seizure on a "misunderstanding" and has said it can clear up the matter.

In September, Italian financial police seized assets from an IOR account at the Rome branch of Credito Artigiano SpA after investigators alleged that the Vatican had failed to provide information about the origin or destination of the funds.

Most of the euro23 million ($30.2 million) was destined for JP Morgan investment bank in Frankfurt, with the rest going to another Italian bank, Banca del Fucino.

In a separate case, police say they uncovered money laundering involving the use of a Vatican Bank account by a priest whose uncle was convicted of Mafia association.

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