How a Dirty Money Trail From Venezuela to Iran Brought Down a Swiss Bank

(Bloomberg) — Each time he landed a six-figure commission for his tiny Swiss bank, Paul-Michel von Merey was known to thunder through the open-plan office close to Lake Zurich, loudly ringing a cow bell in celebration.

The regular clanging reflected a lucrative seam his firm was mining. MBaer Merchant Bank AG, which von Merey co-founded in 2018, would sometimes charge clients as much as ten times the going rate to process payments, according to people familiar with the matter, in particular transactions that other banks wouldn’t handle.

But even as the firm was named among the “most prosperous” Swiss private banks last year by a local wealth-management event, its end was near. The alleged facilitation of money laundering brought the Swiss minnow to the attention of Treasury Secretary Scott Bessent, who on the eve of war with Iran late last month, effectively forced it to shut down.

“MBaer has funneled over a hundred million dollars through the US financial system on behalf of illicit actors tied to Iran and Russia,” Bessent said in a statement. The threat to cut the bank off from the US financial system was enough to overcome legal challenges to the Swiss regulator Finma’s earlier order to liquidate the firm.

The following is an account of how MBaer managed to operate under the radar, while, according to US officials, being in some cases “likely complicit in their clients’ money laundering activities.” Its ignominious end undermines Switzerland’s years-long efforts to clean up its financial system and prove that Zurich and Geneva no longer offer an easy haven for cash linked to crime.

A spokesperson for MBaer declined to comment for this report. Finma also declined to comment.

MBaer was founded as a merchant bank designed to serve both clients’ business interests — such as trade finance — and their private wealth. Its eponymous co-founder and the bank’s first chief executive officer, Mike Baer, had spent 12 years at Julius Baer Group Ltd, the bank established by his great-grandfather. During that time he cycled through several senior roles, including head of banking, trading and IT, according to his LinkedIn profile. At Julius Baer he also got to know many prospective clients and some of the other MBaer partners.

Mike Baer and Paul von Merey declined to comment for this report.

By early 2005 Mike Baer had left the family bank and in the years that followed he held a number of board positions, according to his LinkedIn account, including at Odey Asset Management and Falcon Private Bank, both of which have had their own unrelated regulatory issues in recent years.

A keen runner who has completed marathons at both the North and South poles, Baer drew heavily on the family name. “The MBaer Merchant Bank’s heritage dates back to 1890, when Julius Bär laid the foundations for a long tradition of banking in Zurich,” the bank said on its website.

Over the years the bank rapidly expanded, in particular experiencing a jump in assets in 2023. At the end of 2025 it held client assets worth some 4.9 billion Swiss francs ($6.2 billion), and had about 700 clients and around 60 employees. Its size meant that initially the bank was in the lowest category for supervision by Swiss regulator Finma — for small market participants, or “low risk.”

Insiders described the bank’s culture as reminiscent of the more freewheeling days of Swiss finance — before the confrontation with the US over tax evasion in the 2000s prompted attempts at a cleanup and an end to absolute banking secrecy.

According to investigators at the US Treasury’s financial crime unit FinCEN, the bank began to attract attention for potential money-laundering activity connected to Venezuela around 2020. The bank allegedly then went on to enable financing of the Russian war machine and helped channel Iranian oil funds back to the regime — including to the Revolutionary Guard Corps.

“MBaer has also provided access to the US financial system to persons providing material support to Iran-related money laundering and terrorist financing efforts, including support to Iranian foreign terrorist organizations,” FinCEN said in a document published on March 2.

The officials accused MBaer of facilitating payments in connection with an international oil smuggling and money laundering scheme conducted by the Quds Force of the Revolutionary Guard. The US considers the Quds Force, which operates outside the country, as a foreign terrorist organization.

MBaer customers remitted some $37 million in connection with a sanctioned firm named Turkoca Import Export Transit Co. Ltd in large, round-dollar payments that would normally have raised money-laundering red flags, FinCEN states. Turkoca was “a pass-through entity” used by Quds Force affiliates to launder funds for Iran, FinCEN said.

Internal Warnings

MBaer allegedly had a number of methods for conducting business below the radar. Employees enabled payments in Swiss francs or euros for high-risk clients in an attempt to sidestep closer controls on dollar transactions, people familiar with the matter said.

Some employees did raise alarms regarding operational deficiencies. Many encountered significant internal obstacles after flagging their concerns or were managed out of the firm. This created a culture of fear among the staff and reluctance to highlight perceived wrongdoings, the people said.

In 2023 US authorities and Finma started to investigate the bank more closely.

Around the same time, MBaer parted ways with the firm acting as its US correspondent bank — the now-defunct Credit Suisse, according to people familiar with the matter. JPMorgan Chase & Co. later provided that service, people familiar said, along with a number of other financial institutions.

JPMorgan declined to comment on its relationship with MBaer.

In 2024, a then-board member, Bignia Vieli, engaged the law firm at which she was a partner to conduct a review of the bank’s operational infrastructure, which identified widespread systemic risks. The report went so far as to suggest the bank should self-report to Finma.

Legal Hold-Up

Yet despite raising money-laundering concerns, seemingly no significant corrective action was taken after the report, according to people familiar with the matter, who said management still received full bonuses. Vieli did not respond to a request for comment.

Finma formally started enforcement proceedings against MBaer in 2024. It later said that 98% of the bank’s recent client assets had come from “high risk” sources, according to a statement. The bank had systematically failed to investigate the background of its client relationships and had actively aided clients in circumventing asset freezes, Finma said.

Yet under Switzerland’s regulatory system, an enforcement proceeding can drag on for years, and lenders can continue to conduct business while legally challenging Finma orders. By early 2026, a Finma order to shut MBaer was stuck in court following a challenge from MBaer — until the US Treasury intervened.

On Monday Feb. 9, MBaer’s Chief Executive Officer since January 2025, Annett Viehweg, tried to reassure the bank’s employees, a person present at the meeting said. MBaer would defend itself in court, Viehweg said, according to the person.

The bank ended up negotiating with Finma about the terms under which they would self-liquidate, according to people familiar with the matter. The two parties were at odds over whether money laundering would specifically be mentioned in the statement announcing the closure, by the time that the US Treasury forced their hand, the people said. MBaer subsequently removed its appeal, meaning the liquidation order became effective on Feb. 27.

Von Merey and Mike Baer have left the firm, and both have kept a low profile. Von Merey’s LinkedIn account downplays his role at MBaer. Last month, Finma also said it had opened proceedings against four unnamed individuals associated with MBaer. Those center on persons who have already left the bank, a person familiar with the matter said. Employees have been informed that up to 25 people would be cut in March and April.

For a firm accused of laundering money for Venezuelans, Russians and Iranians, the end for MBaer took a surprisingly long time to arrive. Finma has called the case “extremely serious.”

MBaer’s “high risk” client base now faces a wait for resolution that could take years, with few if any other banks in Switzerland willing to take them on.

–With assistance from Fabienne Kinzelmann.

©2026 Bloomberg L.P.