The Swiss Financial Market Supervisory Authority (FINMA) has formally concluded its fifth enforcement proceeding against private‑bank Julius Bär. The case stems from two separate investigations: one into unsecured private‑debt loans granted to a European group and its founder, and another into client relationships with two Russian politically exposed persons (PEPs).
FINMA found that Julius Bär breached supervisory provisions, notably the requirements for robust risk management and anti‑money‑laundering (AML) obligations. Between September 2019 and 2023, the bank extended eight loans to the European group, with the total exposure exceeding CHF 1 billion. The bank lacked adequate internal controls, ignored its own debtor limits, and failed to report concentration risks. The loan portfolio was eventually written down in full, with CHF 586 million outstanding at the end of 2023.
In the AML investigation, the bank did not sufficiently verify the source of assets linked to the Russian PEPs, ignored negative media reports, and breached reporting duties under the Anti‑Money Laundering Act. A 2019 "Know Your Client Exception" allowed the bank to bypass standard due‑diligence procedures, justified by an employee’s personal ties to the PEP family.
FINMA noted that similar shortcomings have recurred in five enforcement actions against Julius Bär over the past decade, indicating a persistent weak risk and compliance culture. While the bank had already implemented many immediate measures imposed during the proceedings, FINMA lifted or relaxed some of those measures after concluding the case.
Going forward, Julius Bär must submit detailed reports on its risk, error and compliance culture to FINMA until 2032. The regulator also ordered the gradual phase‑out of a temporary ban on new business with high‑risk‑country PEPs, tied to the bank’s revised risk appetite and the ongoing divestment of incompatible clients. The bank has discontinued its private‑debt business, reduced overall lending, overhauled remuneration, and initiated a cultural transformation, including changes at board and executive levels.
FINMA’s action underscores the regulator’s focus on ensuring that Julius Bär’s risk and compliance improvements are implemented sustainably across the institution.
