An Italian court has released €23 million it had seized from the Vatican bank in 2010 amid an inquiry into allegations of money-laundering, Ansa news agency said.

The investigation centred on suspicious cash transfers in 2009 of 20 million euros (27 million dollars) to a branch of US bank J.P. Morgan in Germany and a further three million euros to the Italian Banca del Fucino.

Rome prosecutors said Wednesday that their decision to release the money was based on the Vatican's swift move to set up a new financial authority aimed at tackling allegations of money-laundering and "financing of terrorism".

New rules at the Holy See which came into effect on April 1 impose sentences of up to 12 years in prison for money-laundering and up to 15 years for "financing terrorism".

Pope Benedict XVI created the new financial authority in December to address "the prevention and opposition to illegal financial activity."

The move came despite insistence from the Vatican that the Institute for Religious Works (IOR) -- the official name of the Vatican bank -- was blameless.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.