Monsignor Nunzio Scarano, a former top Vatican accountant now on trial for an alleged plot to smuggle 20 million euros from Switzerland into Italy, was further charged today with laundering millions through the Vatican bank, his lawyer said.

Scarano has been under house arrest in his native Salerno in southern Italy as part of the money smuggling trial that began on Dec. 3. The new charge pertains to suspected laundering via his accounts at the Vatican bank, lawyer Silverio Sica told Reuters.

Scarano is on trial on charges of conspiring to smuggle some 20 million euros out of Switzerland for rich shipbuilder friends in Salerno, near Naples.

Police said Scarano and two other people served with arrest warrants on Tuesday were suspected of laundering and making false statements. Sica said one of the arrested was a priest friend of Scarano, who was suspended from his job at the Vatican last year.

A police statement said millions of euros in "false donations" from offshore companies moved through Scarano's accounts at the Vatican bank, formally known as the Institute for Works of Religion (IOR).

They said millions of euros worth of bank accounts and real estate holdings were in the process of being confiscated as part of the police operation in Salerno that coincided with the issuing of the arrest warrants.