Rome , Italy ( CNN ) -- Italian prosecutors ' decision to seize Vatican Bank funds as part of an investigation into possible money-laundering was correct , an Italian court ruled Wednesday . The Vatican expressed `` surprise '' that its appeal had been rejected and stood by its position that the investigation was the result of a misunderstanding . Italian prosecutors last month froze Vatican Bank transactions for the first time ever , after the bank failed to provide all the information required by anti-money laundering rules . Prosecutors seized 23 million euros ( about $ 30 million ) in Vatican Bank transactions `` as a cautionary measure , '' prosecutor Nello Rossi told CNN in September . Pope Benedict XVI personally told the director of the Vatican Bank that he trusted him and appreciates the work he is doing , the Vatican said the day after they met on September 26 . Ettore Tedeschi , the bank head , was among the faithful meeting Benedict that day after the pope 's weekly Angelus address . Tedeschi kissed the pope 's hand and gave him a copy of his book `` Money and Paradise , '' and they exchanged a few words , the Vatican said . Tedeschi told CNN before the meeting with the pope that he was incredulous and `` humiliated '' when he learned Italian investigators were looking into money-laundering allegations against the bank . He said the probe was the result of a `` misunderstanding . '' `` My first reaction was of incredulity and afterwards , that of feeling humiliated in the intense work that , along with [ bank ] Director-General [ Paolo ] Cipriani and all of the institute 's managers , I 've been carrying out , '' Tedeschi told CNN by e-mail September 24 . `` After discussing with Dr. Cipriani the actions that spurred the inquiry , I was relieved , and I 've realized that we had to immediately take action in explaining the facts to various levels and places , '' he said . Tedeschi said he also realized the need to speed up the process of getting the Vatican Bank on the `` white list '' of banks that comply with internationally agreed standards , `` to prevent other misunderstanding events like the one that just happened . '' This is not the first time Italian prosecutors have investigated the bank , but probes are extremely rare , Rossi said . The probe began after another Italian bank informed Bank of Italy investigators of two Vatican Bank transactions that did not appear to comply with anti-money-laundering requirements , the Bank of Italy said . When Bank of Italy investigators told legal authorities about the transactions , they were told that judicial authorities were already investigating the Vatican Bank , a source close to the investigation said . The Vatican Bank is `` the most secret bank in the world , '' author Jeffrey Robinson said after the funds were seized , and he said there is no way to find out how much money it controls . The Vatican 's sources of income include its vast real estate holdings , explained Robinson , who wrote `` The Laundrymen , '' which looks at money laundering worldwide . The Bank of Italy investigation was prompted by two wire transfers that the Vatican Bank asked Credito Artigiano to carry out , the Bank of Italy said . The Vatican Bank did not provide enough information about the transfers -- one for 20 million euros ( about $ 26 million ) and one for 3 million euros ( about $ 4 million ) -- to comply with the law , prompting the Bank of Italy to suspend them automatically , it said . It is not entirely clear how much legal authority Italian officials have over the Vatican Bank , since the Vatican is a sovereign state . They had the power to seize the money and stop the transactions because they took place on Italian soil , said Rossi , the prosecutor . An effort by Holocaust survivors to sue the Vatican Bank in the United States failed in 2009 when a U.S. court ruled that the Vatican Bank had `` sovereign immunity '' and was not subject to lawsuits filed in the United States . A lawsuit against related entities is still in court . The Vatican Bank was created by an order of the pope `` to carry on activities that are for pious causes , '' according to expert testimony related to the Holocaust suit . It accepts deposits only from top Catholic Church officials and entities , Settimio Caridi testified in U.S. District Court in 2006 . It uses its funds `` for designated pious purposes '' and is `` an autonomous pious foundation , '' he said . Caridi , a top Italian legal scholar who was called to testify by Vatican lawyers , said the bank is an integral part of the Vatican , a `` central entity under the oversight of the Holy See . '' It is ultimately overseen by a commission of five cardinals -- the top position in the Vatican hierarchy below the pope -- which is headed by the Vatican secretary of state . The Vatican Bank is subject to particularly stringent anti-money-laundering regulations because Italian law does not consider it to be operating within the European Union . It must supply more detailed information about transactions than European Union banks have to give . CNN 's Hada Messia in Rome and Richard Allen Greene in London , England , contributed to this report .
Prosecutors seized about $ 30 million in transactions last month over money-laundering fears . The Vatican says there was a misunderstanding and appealed against the seizure . Pope Benedict XVI is standing by the head of the bank , the Vatican says . It 's `` the most secret bank in the world , '' says a money-laundering expert .