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Financial Watchdog Slams Swiss Bank For Failing To Fight Money Laundering

Switzerland’s Financial Watchdog On Thursday Issued Scathing Criticism Of Julius Baer Private Bank For Failing To Do Enough To Combat Money Laundering For Years.

PTI | Updated on: 21 Feb 2020, 06:51:11 AM

Julius Baer had carried out a $71 million transaction for an unnamed large Venezuela client. (Photo Credit: Photo For Representation)


Switzerland’s financial watchdog on Thursday issued scathing criticism of Julius Baer private bank for failing to do enough to combat money laundering for years.

The Swiss Financial Market Supervisory Authority (FINMA) said in a statement it was appointing an independent auditor to ensure Julius Baer complies with law and was banning it from handling large deals until it had done so.

FINMA said that “serious” failings in the bank’s rules were identified “in connection with alleged cases of corruption” involving Venezuela’s state oil company, PDVSA, and world football’s governing body, FIFA.

In one case, FINMA said that Julius Baer had carried out a 70 million Swiss franc (66 million euro, $71 million) transaction for an unnamed large Venezuelan client “even though the bank had learnt in the same year that the client was facing accusations of corruption”.

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The watchdog also said client advisers were being remunerated almost exclusively based on financial targets, rather than compliance and risk management goals.

It found that one client adviser looking after Venezuelan clients in 2016 and 2017 received bonuses “in the millions” even though the bank had reported a number of his clients to Swiss money laundering authorities.

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FINMA said its investigation on the period 2009 to 2018 had found that Julius Baer was “in breach of obligations to combat money laundering and its duty to put in place an appropriate risk management policy, representing a serious infringement of financial market law”.

It said it had found irregularities in “almost all” of the business relationships selected on a risk basis and the “vast majority” of sample transactions.

The bank “did not do enough to determine the identifies of clients, nor did it establish the purpose and background of its business relationships,” FINMA said.

“Information was frequently missing as to how individual clients had come by their wealth, why they wanted to open an account with Julius Baer and what business they were planning to transact,” it added.

A former executive at Julius Baer, Matthias Krull, a German national and resident of Panama, was sentenced to 10 years in prison in 2018 for his role in a massive money laundering scheme involving Venezuela.

Krull pleaded guilty for his role in conspiracy to hide funds embezzled from Petroleos de Venezuela, or PDVSA, the principal source of income in the country now suffering economic collapse and massive inflation.

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First Published : 21 Feb 2020, 06:51:11 AM