The Swiss Financial Market Supervisory Authority concluded a combined enforcement proceeding against Julius Bär, finding serious failings in credit risk management and compliance with anti-money laundering obligations. The case, its fifth concluded enforcement proceeding against the bank in less than 10 years, resulted in extended reporting, capital and shareholder payment controls, as well as the confiscation of about CHF 10 million in profits. Some earlier restrictions were lifted or relaxed following changes to the bank’s risk profile and remedial action. In its private debt business, Julius Bär granted eight loans to a European group and its founder from 2019, with total lending exceeding CHF 1 billion in 2022 and 2023. The bank lacked adequate governance, controls and trained staff, disregarded internal debtor limits and concentration risk reporting requirements, and failed to address conflicts of interest and warning signs. An outstanding CHF 586 million exposure was fully written down at the end of 2023. Separately, the bank inadequately examined the source of assets and suspicious behavior involving clients linked to two Russian politically exposed persons, failed to scrutinize negative media reports and breached statutory reporting obligations. Julius Bär must report on its risk, error and compliance culture through 2032. A ban on new relationships with politically exposed persons from high-risk countries will be phased out as the bank completes the divestment of client assets outside its revised risk appetite, and the bank must hold an additional CHF 250 million in capital until then. Shareholder payments, including dividends, require prior FINMA approval. The ruling is not yet legally binding, and FINMA has opened proceedings against three former employees who may bear responsibility for the violations.

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