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Julius Bär sanctioned after money laundering breaches

statue of a hand holding an oil well
PDVSA, Venezuela's state-owned oil company, was one client cited in the case. Copyright 2020 The Associated Press. All Rights Reserved

Switzerland’s financial watchdog has temporarily banned the Zurich-based bank from making big aquisitions, for not complying with money laundering standards in the period 2009-2018.

The Swiss Financial Market Supervisory Authority (FINMA) cited the bankExternal link for a “serious infringement of financial market law” and barred it from undertaking “large and complex acquisitions until it once again fully complies with the law”.

It ordered the bank to adopt certain measures to ensure the gaps are filled, including an overhaul of its hiring and management of client advisors, as well as its system of reward and punishment.

FINMA said the criticisms were related to the period 2009-2018, and were connected with the Venezuelan state-owned oil company PDVSA and football’s world governing body FIFA.

The bank didn’t do enough to determine the identities and backgrounds of clients, FINMA said, and its “remuneration system focused almost exclusively on financial targets and paid scant regard to compliance and risk management goals”.

“As an example, a CHF70 million (about $70 million) transaction was carried out in respect of a large Venezuelan client in 2014 without the required investigations, even though the bank had learnt in the same year that the client was facing accusations of corruption,” it added.

An independent auditor will be appointment by FINMA to oversee the reform process.

In its reactionExternal link, Julius Baer said that it “acknowledges in principle the conclusions regarding shortcomings in the fight against money laundering in its Latin American business”.

It said that had addressed identified deficiencies and had begun to implement remedial measures, including the appointment of new managers and by beefing up its global risk management system over the past two years. It also said that future focus would “shift from new money growth to sustainable profit growth”.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR