Julius Baer’s Fine in Money Laundering Case Compounds Legal Woes

(Bloomberg) — Julius Baer Group Ltd. has been ordered to hand over 4.4 million Swiss francs ($5.2 million) including confiscated profits linked to alleged failures in money laundering controls, in a fresh setback for the bank’s newly installed management team.

The Zurich-based bank had been under investigation over transactions that had occurred between 2009 and 2019 and linked to operations in Monaco and Singapore, according to a person familiar with the matter. 

The previously undisclosed “enforcement proceeding” is separate to an existing Finma probe into losses linked to the Signa real estate empire, in which Baer was forced to write off $700 million in loans last year. The new revelations cast a shadow over efforts by the bank’s Chief Executive Officer Stefan Bollinger and Chairman Noel Quinn — in their roles since January and May respectively — to move past that damaging scandal. 

The Financial Times reported the money-laundering proceeding earlier. Finma declined to comment on the matter. The regulator can confiscate profits it deems to have been obtained through serious violations of the law, but it cannot hand down punitive fines.

In February, Bollinger’s first steps to overhaul the bank were marred by the announcement that Finma had opened a formal enforcement proceeding related to the Signa case after a period of investigation. The opening of the case could end in sanctions including a reprimand or bans on individuals working in the financial sector. 

As it seeks to reduce costs and boost growth, Julius Baer is cutting jobs and has told investors that there is no share buyback program planned for this year. Bollinger has also warned that restructuring efforts at Switzerland’s second-largest listed lender will push up expenses at first. 

In the wake of Credit Suisse’s demise in 2023, the regulator Finma has stepped up its activism in several areas. In just over a year, the body under Stefan Walter has announced penalties or investigations against seven banks and fintech firms, including Julius Baer, using the limited powers that it has.

–With assistance from Bastian Benrath-Wright.

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