Scarano, works in the Vatican's financial administration, was arrested during an inquiry into a Vatican bank scandal for alleged corruption and fraud, the BBC reported.
A secret service agent and a financial broker at the bank have also been arrested. The three allegedly worked together to illegally move more than $26 million from Switzerland to Italy.
Scarano was suspended from his position as a senior accountant for a Vatican's Administration of the Patrimony of the Apostolic See department "about a month ago, after superiors learned about an investigation into his activities," Vatican spokesman Federico Lombardi said.
Lombardi said Friday the Vatican would cooperate "fully" with the investigation into Scarano, Italy's ANSA news agency reported.
Notable deaths of 2014 [PHOTOS]