A financial watchdog has praised the Vatican for improving its financial management and taking steps to combat money-laundering, but has said prosecutions need to follow.

The report from Moneyval, the Council of Europe's lead agency in the struggle against corruption and the financing of terrorism, said that legal reforms in the Vatican had been positive. It said that the Vatican Bank had shut down nearly 5,000 suspicious accounts but that there had been "no real results" in terms of prosecutions for serious crimes or the confiscation of assets.

The evaluators concluded: "All in all, the basically sound legal structure that has been put in place ... now needs to deliver some real results on the prosecutorial side in the Holy See and the Vatican City State."

The review of Vatican procedures was launched under Pope Francis' predecessor Benedict XVI and was driven by a series of scandals and the need to comply with international standards in order to keep operating. Pope Francis has backed the reforms and said that the Vatican's finances needed to be more transparent.

A 2013 report said: "Much work has been done in a short time to rectify deficiencies in all areas."

Vatican prosecutors have so far frozen about €11m (£8m) and 29 money-laundering investigations have been launched.

The report issued this week said that suspect money needs to be seized and that prosecutions should follow. "While a significant amount of assets is reported to be frozen, there are no real results emerging by way of serious prosecutions or confiscations in any of the outstanding enquiries which involve allegations of money laundering," the report found.

It said that Vatican officials needed to be fully trained and resourced: "The authorities need to satisfy themselves that the Gendarmerie and the Promoter's office have the capacity to conduct proactive financial investigations thoroughly and expeditiously, and to follow up investigations where necessary with clear requests for mutual legal assistance."

"The latest progress report confirms that the Holy See has established a functional, sustainable, and effective system, aiming at preventing and fighting financial crimes," said Vatican spokesman Rev Antoine Camilleri.