FINMA Finds Serious AML Failures at Julius Baer and Orders CHF 10 Million Profit Confiscation

Switzerland’s Financial Market Supervisory Authority (FINMA) has concluded enforcement proceedings against Julius Baer after finding serious breaches of supervisory law, including failures in anti-money laundering controls and risk management.

The 29 September 2026 decision combines two matters: private debt lending to a European group and client relationships involving two Russian politically exposed persons (PEPs). FINMA said the cases exposed significant deficiencies in the bank’s risk and compliance culture.

Serious AML breaches involving Russian PEP-linked clients

FINMA found that clients linked to two Russian PEPs presented a high risk, but Julius Baer failed over several years to adequately establish and scrutinise the origin of their assets. The regulator also found that the bank did not sufficiently assess negative media reporting or suspicious client behaviour and breached reporting obligations under Switzerland’s Anti-Money Laundering Act.

According to FINMA, the bank made a “Know Your Client Exception to Policy” (KYC-EtP) in 2019 instead of applying its normal due diligence and reporting requirements. The exception relied on an endorsement from a Julius Baer employee in favour of the PEP client. The bank did not adequately challenge the arrangement during subsequent reviews even though the employee had close personal ties to the PEP client’s family.

FINMA is confiscating approximately CHF 10 million in profits generated in breach of supervisory provisions in connection with the two Russian PEP client groups.

Private debt exposure exceeded CHF 1 billion

The enforcement action also addressed Julius Baer’s private debt business. From September 2019, the bank granted eight loans to a European group and its founder. The total value of the loans exceeded CHF 1 billion in 2022 and 2023.

FINMA found that Julius Baer lacked adequate internal rules, effective controls and sufficiently trained staff for this business. The bank also ignored warning signs, repeatedly exceeded internal single-debtor limits and breached regulatory requirements concerning the reporting of concentration risks.

The regulator said employees and external intermediaries received salaries and commissions running into millions in connection with the client relationship. It also identified opaque equity transactions and a EUR 60 million pass-through transaction. The CHF 586 million exposure remaining at the end of 2023 was ultimately written down in full.

Additional capital and continuing supervisory measures

Julius Baer has discontinued its private debt business, reduced lending, strengthened control functions, revised its remuneration system and redefined its risk appetite. FINMA also noted changes to the bank’s board, executive management and corporate governance.

Further supervisory measures remain in place. Julius Baer must report to FINMA until 2032 on its risk, error and compliance culture and related remediation. A temporary restriction on establishing new relationships with PEP clients from high-risk countries will be phased out as the bank completes the divestment of client assets that no longer fit its risk appetite.

Until that process is completed, Julius Baer must maintain CHF 250 million in additional capital. Shareholder distributions, including dividends, require FINMA’s prior approval.

FINMA said this is the fifth enforcement proceeding against Julius Baer concluded in less than ten years. The regulator has also opened proceedings against three former employees who may be responsible for breaches of supervisory provisions or internal rules.

The 29 September ruling is not yet legally binding.

Source

Swiss Financial Market Supervisory Authority (FINMA), “FINMA concludes enforcement proceeding against Julius Bär”, 29 September 2026.