A former Vatican accountant already under house arrest and on trial for alleged corruption and attempted money laundering has been notified of fresh charges against him, Italy's financial police said on Tuesday.

The police said in a statement that they had seized Monsignor Nunzio Scarano's luxury 17-room apartment and blocked nearly 9.0 million euros ($12 million) on current accounts linked to the senior Italian cleric.

The Vatican in July last year said it had already frozen assets belonging to Scarano and the police on Tuesday said these funds amounted to 2.2 million euros.

"This is very significant," the police said in a statement, a reference to unprecedented levels of cooperation between Vatican and Italian judicial authorities on a high-profile financial crime case.

Vatican bank spokesman Max Hohenberg told AFP: "All activity on his accounts over the past 10 years has been extracted, analysed and submitted to authorities.

"This investigation is based on information provided by the Vatican," he said.

The police said a priest in Scarano's hometown of Salerno who was an aide to the monsignor, Father Luigi Noli, has also been charged and put under house arrest.

A total of 52 people are being investigated in the case, including a notary who allegedly helped organise the money laundering scheme and lawyers, doctors and businesspeople who are suspected of making use of it.

Scarano is accused of taking cheques marked "Donation for the Poor" and in return giving cash from accounts at the Vatican bank, officially known as the Institute of Religious Works or IOR under its Italian acronym.

The police said they had seized two bank accounts at a branch near the Vatican of Italy's UniCredit, one in Scarano's name and the other belonging to a company in which the prelate held 99 percent of shares.

One of the cash withdrawals made by Scarano and traced by police was for 588,248 euros and the police said he gave it to 50 people and used it to pay back a mortgage.

They said they managed to find at least five million euros that Scarano "had at his disposal" and alleged he made extensive property investments in Salerno.

The prelate's lawyer, Silverio Sica, said his client used the money for charity and could not be responsible for the provenance of donations he received.

"These are donations we received over the years from wealthy people. They are free donations. It is not up to us to say where the money came from," he told AFP.

Silverio Sica said the latest accusations had been a "blow" for Scarano and that he had requested that a psychiatrist be allowed to visit him, adding: "He is completely in shock, he is very disoriented."

The police said their suspicions were first aroused in January 2013 when Scarano reported a theft from his home of "several million euros' worth of valuables".

They said the sum was "significantly disproportionate" to Scarano's declared income.

Scarano was arrested in June of last year on suspicion of being an intermediary for suspect payments from Monaco to Italy, carried out through the Vatican bank.

The clergyman has since been suspended from his duties as chief accountant for APSA, the organisation that manages the Vatican's vast real estate portfolio.

Investigators said Scarano used IOR accounts to make transfers to friends and attempted to repatriate from Switzerland 20 million euros that were untaxed, on behalf of a family of ship owners from Naples.

Scarano's trial started in December last year.

The Vatican, the world's smallest sovereign state, has launched a series of reforms aimed at bringing its bank into line with international standards against money laundering.

The bank has been plagued by scandals in the past and its former president, Paul Marcinkus, sheltered in the Vatican for years to fight off repeated attempts by Italian judicial authorities to arrest him in the 1980s.