A Mayfair-based broker who represented the Vatican in a deal to buy a property development in London has been arrested in Britain’s capital on money laundering allegations.

Gianluigi Torzi, a London-based Italian businessman, was detained on Tuesday by UK police carrying out a request from Italian authorities, his lawyers said in a statement. The arrest is part of a criminal probe into the Vatican property transaction.

The Vatican has alleged Torzi extorted €15m of payments in his role as a middleman appointed by Holy See officials to acquire 60 Sloane Avenue, a property development in the high-end London district of Chelsea. The purchase took place in 2018 and used charitable funds from the Catholic Church. Torzi has denied any wrongdoing.

The Vatican’s own prosecutors are investigating payments made in connection with the transaction, which they allege resulted in the Holy See suffering large financial losses.

The arrest warrant for Torzi in the UK was connected to the money he received from the Vatican as well as other alleged offences related to fraudulent invoicing and tax offences.

Ambra Giovene and Marco Franco, Torzi’s lawyers in Italy, said in a statement that proceedings to extradite him to Italy had begun.

“Mr Torzi’s defence has requested his release on bail. The English judge has refused this request and fixed a new hearing within 48 hours in order to give the defence the possibility of demonstrating there is no risk [of Torzi] fleeing,” they said.

A person close to Torzi said that he had made himself available to the British police and handed over his passport, and so he was not a flight risk.

The Financial Times reported last year that senior Vatican officials signed off on Torzi’s appointment as a middleman to acquire the London property on behalf of the Holy See, in spite of him having appeared on an anti-money laundering watchlist.

In December 2018, as he was negotiating his fees for his work representing the Vatican in the Chelsea property deal, Torzi was granted a private audience with Pope Francis in his residence.

The Vatican arrested then released Torzi last year after he provided Vatican police with statements and evidence about the transaction. He has said he was appointed by the Vatican officials in good faith to broker the purchase of the property and was paid for legitimate work he carried out on behalf of the Holy See.

Earlier this year a UK judge overturned an asset freezing order against Torzi that had been requested by the Vatican. The judge said that evidence of the allegations made against the Italian businessman was incomplete and flawed.