Julius Baer was ordered by Switzerland's financial regulator to pay more than 4MMN for its anti-money laundering and compliance failures in dealing with high-risk customers.
The enforcement ruling was dated November 2024 and was seen by the Financial Times, but has not been disclosed publicly.
According to a decision statement from the Swiss Financial Markets Supervisory Authority (FINMA), the decision focused on the failure of the second largest listed lender, Julius Baer, in a suspicious transaction between 2009 and 2019.
The law enforcement action is the latest blow to the scandal-striking Julius Baer, which is trying to turn around. This comes after being forced to write down its entire SFR 606 million stake last year, triggering a leadership-wide overhaul on now-acquired Austrian real estate group Signa.
The regulator found in November's decision that Julius Baer committed a "serious violation" of the rules, citing the bank's obligation to combat money laundering.
The document says it ordered banks to repay SFR3MN with profits made illegally, which would be "forfeited... in the interest of the Swiss federal government." The bank was also ordered to pay a SFR of $13,000.
According to the document, Finma's investigation covers issues related to clusters of clients related to the alleged misappropriation of public funds by Moscow authorities. The whistleblower report raised another cluster, which was associated with several Indian nationals, primarily served by the bank's "non-resident India" team in Dubai, as well as Zurich and Singapore.
Finma found that despite dangerous flags, including legal proceedings against him and questions about the source of his wealth, the bank continued to manage the accounts of Russian bankers. Watchdogs say Julius Baer failed to identify and adequately address these risks.
The regulator also highlighted the issue of reservation locations, including its Monaco and Singapore branches.
The decision is separate from the law enforcement process disclosed by regulators in February regarding Julius Baer’s losses to the loss of signatures, a property empire owned by Austrian tycoon René Benko, which applied for administration in 2023.
Finma had previously punished Julius Baer for being "obviously insufficient" to his obligation to combat money laundering and develop appropriate risk management policies. In 2020, the bank made large-scale acquisitions of banks over suspected corruption cases between 2009 and 2018, related to state-owned energy group Petróleos de Venezuela (PDVSA) and the international dominant body of football.
The bank has overhauled its leadership, and former Goldman Sachs banker Stefan Bollinger joined the CEO in January and launched an aggressive cost-cutting program, cutting efforts, reducing executive committees and refining the bank’s strategy. Former HSBC boss Noel Quinn takes over as chairman this month.
The latest law enforcement decisions may increase pressure to reform Julius Baer’s risk management process. The bank previously said it had begun overhauling its systems and had been committed to meeting compliance standards.
It will shut down its private debt business last year under pressure from shareholders and regulators, which is increasingly exposed to Signa.
Julius Baer declined to comment.
Finma said, “no comment on its oversight activities, individual cases or any possible investigation or litigation”.