Swiss financial watchdog FINMA has concluded an enforcement action against Julius Baer, determining the bank committed “serious” breaches of regulatory provisions concerning money-laundering prevention and risk governance.
This marks FINMA’s fifth enforcement action against the bank in under a decade.
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It saw the regulator consolidating two distinct proceedings, as both involved lapses in the bank’s risk management as well as culture.
The first inquiry examined eight private debt facilities granted to a European corporate group and its founder from September 2019, which grew to surpass SFr1bn ($1.19bn) during 2022 and 2023.
Following earlier identified “weaknesses”, FINMA determined that the institution was “not properly equipped for these loans” due to deficient internal rules, insufficient staff training, and absent control structures, even whilst staff and intermediaries collected millions in remuneration and commissions.
The second case uncovered “serious breaches” of anti-money laundering duties, after the bank spent several years failing to verify asset origins for high-risk accounts connected to two Russian politically exposed persons (PEPs).
To address the findings, the bank closed its private debt division, curtailed lending, restructured its pay schemes, as well as appointed new personnel to its board of directors and executive board.
It also revised its risk criteria to offload non-compliant client assets over coming years.
Under the ruling, the bank must provide progress reports on its compliance and risk culture to FINMA until 2032.
A provisional ban on onboarding PEP clients from high-risk territories will be lifted incrementally as unsuitable assets are divested.
Until that process finishes, Julius Bär must maintain SFr250m in supplemental capital, creating an effective minimum CET1 ratio of 9.4%, reduced from an earlier requirement of SFr500m.
Julius Baer said it “acknowledges” the findings, noting remedial steps have been implemented “proactively” alongside FINMA whilst the firm proceeds with its 2026–2028 strategic targets and revised risk framework.
