Compliance

Swiss Regulator Scolds Julius Baer Over AML Failings

Tom Burroughes, Group Editor, London, 21 February 2020

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The problems are linked to alleged corruption involving a nationalised Venezuelan oil business and scandal-warped global soccer organisation FIFA. The regulator has banned the bank from "large and complex" acquisitions until it is fully complying with the law.

Julius Baer “fell significantly short” of fighting money laundering in a nine-year period, Switzerland’s main financial regulator said yesterday. The failings were linked to alleged corruption cases involving Venezuelan state-owned oil group PDVSA and scandal-hit global football body FIFA

The bank has also been banned from large and complex acquisitions until it fully complies with the law. The Swiss Financial Market and Supervisory Authority, or FINMA, said in a statement that its enforcement proceedings on Zurich-listed Julius Baer have ended. 

“The proceedings, now concluded, 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,” FINMA said. The offences were not confined to a single advisor.

“FINMA has instructed Julius Baer to undertake effective measures to comply with its legal obligations in combating money laundering and rapidly finalise the measures it has already started putting in place. Moreover, Julius Baer must change the way it recruits and manages client advisors as well as adjusting remuneration and disciplinary policies. The Board of Directors must also give greater attention to its AML responsibilities,” it said. 

The regulator will appoint an independent auditor to monitor how the bank puts these measures into practice.

Venezuela has nationalised its oil industry and is now in the grip of a major political and economic crisis. FIFA has been at the centre of major corruption claims over some of its former officials taking bribes to influence where to hold tournaments. (More on the FIFA saga here.) Ironically, claims about FIFA were made for years but it was only when the US – not typically regarded as a major football power – got involved in following dollar-based flows that people in the organisation were brought to book. 

“We accept FINMA’s findings and regret the shortcomings identified in our business with Latin American clients. This is not compatible with the risk culture that we are striving to achieve. Julius Baer has invested substantially over the past few years in strengthening our compliance and risk management processes to make them fit for the challenges of the future and, as part of our new strategy, we will continue to invest forcefully in these areas,” Romeo Lacher, the bank’s chairman, said in a statement yesterday. 
 

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