Senior Vatican cleric Monsignor Nunzio Scarano was arrested on Friday as part of an investigation into the Vatican bank.
Scarano had previously been an accountant for the Administration of the Patrimony of the Apostolic See.
According to police, Scarano helped transport $26 million into Italy from Switzerland by plane in league with secret service agent Giovanni Zitto and financial broker Giovanni Carenzio.
During the investigation, Scarano said his friends had donated the money to him. Part would be used to pay off his mortgage and the rest would be used to build a home for the terminally ill.
Scarano was arrested in a parish near Rome and taken to the Queen of Heaven jail, along with Zitto and Carenzio.
Vatican spokesman Father Federico Lombardi said the Vatican was prepared to cooperate with authorities. He added that the Vatican’s own financial authority was following the case and would take action if necessary.
While the trio originally planned to transport $46 million, unease and distrust between them led to a decidedly lower amount. However, the money never actually moved from Switzerland because of disagreements and nervousness.