Nunzio Scarano, 61, who was arrested Friday along with a former Italian spy and a financer for allegedly plotting to smuggle millions of euros into Italy, "strongly reaffirms his morality," his lawyers were reported as saying.
"He has defended himself and we have requested he be moved to house arrest somewhere where he can celebrate mass," media quoted lawyers Francesco Caroleo Grimaldi, Silverio Sica and Luca Paternostro as saying, following a three-hour meeting with their client and judge Barbara Callari in Rome.
Scarano "is not well, he is very tried and is not sleeping well," they said.
Scarano, known as "monsignor" in recognition of his seniority at the Holy See, was arrested after an investigation into the Institute for Works of Religion (IOR) - as the Vatican bank is known - raised suspicions he was involved in money laundering.
Rome prosecutor Nello Rossi said he plotted to fly dirty money into Italy on a private jet.
The senior cleric was suspended about a month ago from his position as a member of the administration known as APSA that manages the Vatican's assets, after his superiors learnt about an investigation into his activities.
Scarano, who had worked for years as a senior accountant for the Administration of the Patrimony of the Apostolic See (APSA), is currently being held in Rome's Regina Coeli prison.