(RNS) The scandal-plagued Vatican Bank has a long way to go in order to comply with international standards for independent oversight and financial transparency, according to a report from European officials released Wednesday (July 18).

The report from the Council of Europe said the pope’s bank was compliant or largely compliant on nine of 16 “key and core” internationally recognized standards. But the council's financial transparency department, Moneyval, said the bank was deficient in seven other critical areas, including measures to combat the financing of terrorism.

The Moneyval report also blasted the financial oversight agency that the Vatican set up in 2010 to respond to international demands for greater fiscal transparency at the bank, which is officially known as the Institute for the Works of Religion, or IOR, its Italian acronym.

The report said that the Vatican had "come a long way in a short period of time" and was on track to be approved for the international "white list" of countries that abide by global norms on finance. But it “strongly recommended" that the IOR be "independently supervised by a prudential supervisor in the near future.”

The Vatican Bank is hoping to shake off its long association with scandals and crises, from an infamous banking collapse in the 1980s to the board’s decision in May to oust its president, Ettore Gotti Tedeschi.

At the time he was fired, Gotti Tedeschi was being investigated in connection with a money laundering case. He was also linked to the leak of reams of sensitive papal documents, perhaps the worst in a series of public relations debacles that have roiled Pope Benedict XVI's papacy. 

A team of five cardinals now oversees the Vatican Bank, which is unique among financial institutions in its purposes – it mainly takes deposits from religious groups and the faithful – and its structure. But the Moneyval report made it clear that the IOR has to become more like other national banks if it hopes to continue making progress.

“We take both the praise and criticism contained in the report with seriousness,” Monsignor Ettore Balestrero, the Vatican undersecretary of state who worked with Moneyval, told reporters.

“The report released today is not the end, but is rather an important passage of our continuing efforts to marry moral commitments to technical excellence.”