Swiss regulator FINMA fines Julius Baer over risk and AML breaches; orders 250m francs capital
FINMA said it found serious violations of risk management and anti-money laundering obligations at Julius Baer, ordered additional capital of 250 million Swiss francs until a planned divestment of incompatible clients, and cited breaches tied to private debt loans and client relationships linked to two Russians described as politically exposed.
(Adds details, comment from authority) ZURICH, Sept 29 (Reuters) — Swiss private bank Julius Baer committed serious violations of supervisory provisions related to risk management and anti-money laundering obligations, financial regulator FINMA said on Tuesday, after concluding its investigation. The inquiry was related to private debt loans to a European group and client relationships tied to two Russians who were described as politically exposed. It was the fifth enforcement proceeding carried out by FINMA against Julius Baer in less than 10 years, the authority said.
"There were significant breaches which revealed a deficient internal risk and compliance culture within the bank," added the authority, which ordered Julius Baer to hold additional capital of 250 million Swiss francs ($300 million) until it completes a planned divestment of incompatible clients. From September 2019, Julius Baer granted loans in its new private debt business to a European group and its founder, with the exposure eventually exceeding 1 billion Swiss francs.
The bank ignored numerous warning signs, breached its own risk limits and facilitated opaque transactions that meant the exposure of 586 million francs outstanding at the end of 2023 ultimately had to be written down in full, FINMA said. Separately, the bank failed to adequately scrutinize the origin of assets for high-risk clients linked to two Russian politically exposed persons (PEPs) over several years, breaching anti-money laundering reporting obligations, FINMA said. net)