'Italian prosecutors are investigating the Vatican bank on suspicion of involvement in money laundering, La Repubblica daily reported on Tuesday. The newspaper said the Institute of Religious Works (IOR) and 10 Italian banks, including major institutions such as Intesa San Saolo and Unicredit, were the target of the investigation.

'The hypothesis of the investigators is that subjects with their fiscal residence in Italy are using the IOR as a 'screen' to hide different dealings, such as fraud or tax evasion,' the paper said.'

Read more: Vatican Bank Under Scrutiny