The Vatican bank is to stay in business, but must change its policies to comply with international banking regulations, Pope Francis said Monday.

The bank has been involved in a string of scandals and controversies involving money-laundering and there had been speculation Pope Francis would close it down after he noted that "St. Peter didn't have a bank account." 

Officially called the Institute for the Works of Religion, its core business is the management of cash deposited by Catholic religious institutions and members of the clergy.

Papal directive on 'transparency'

In a statement Monday, the Vatican said "the valuable services that can be offered by the institute assist the Holy Father in his mission as universal pastor" but added that the bank would have to meet 2013 papal directives on "transparency, supervision and financial information."

Pope Benedict launched a cleanup of the bank before his resignation last year. One of his last acts as pontiff was to appoint a German financier, Ernst von Freyberg, as the IOR's president.

Von Freyberg presided over vetting of thousands of accounts, closing hundreds of them to reduce the possibility that the bank could serve as an off-shore haven for illicit revenues. Accounts attached to embassies of countries around the world were among those closed.

 In 2010, Rome prosecutors began a money-laundering investigation, leading to the seizure of 23 million euros ($31 million) from a Vatican account at an Italian bank.

Monsignor Nunzio Scarano, a former Vatican accountant, faces trial on charges of laundering millions of euros through the bank.

String of scandals

Massimo Tulli, the IOR's director and deputy director, who resigned last July, have been ordered to stand trial on charges of violating anti-money laundering norms.

The most infamous scandal involving the IOR was in 1982, when it was caught up in the fraudulent bankruptcy of Italy's Banco Ambrosiano, whose president Roberto Calvi was found hanged under a bridge in London.

Pope Francis extended his internal investigation of the bank by appointing a five-man committee to look into its affairs. At the end of 2013, he said shutting down the bank was one option on the table.

But now the bank is winning plaudits from Italian courts for its co-operation in the past year.

The bank is aiming to complete its client screening by the summer of this year. It issued its first annual report in 2013, replaced its board of directors and has hired a financial risk management and regulatory compliance consulting firm to help it improve its banking practices.

With files from the Associated Press