Feb 27 (Reuters) - Swiss financial regulator FINMA said on Friday that a liquidation order for MBaer Merchant Bank AG was now effective after Washington threatened to cut the Swiss private bank's
By Linda Pasquini and David Lawder
Feb 27 (Reuters) - Switzerland's financial regulator FINMA said on Friday it would wind down MBaer Merchant Bank AG after Washington threatened to cut the private bank's access to the U.S. financial system for money-laundering violations and breaching sanctions against Iran and Russia.
The U.S. Treasury Department had alleged that Zurich-based MBaer and its employees facilitated corruption linked to Russian money laundering, as well as money laundering and terrorist financing on behalf of Iran's Islamic Revolutionary Guard Corps and its Quds Force, which are under sanctions from the United States.
FINMA said in a statement the bank lacked adequate anti‑money‑laundering controls, allowing clients to evade asset freezes. A regulatory investigation found that 80% of MBaer's business relationships carried heightened risks, and 98% of incoming assets came from high‑risk clients.
The bank repeatedly ignored its compliance department's recommendations, systematically failed to investigate the background of its business relationships and transactions, did not always fulfil its anti-money-laundering obligations and, in several cases, executed transactions on behalf of clients who were on sanctions lists, FINMA said.
'DISPROPORTIONATELY HIGH RISKS'
"The case is extremely serious," the regulator said. "Through its conduct and inadequate organisation, (the bank) exposed itself and the Swiss financial centre to disproportionately high risks."
FINMA said MBaer had almost 700 clients and more than 60 employees, and held client assets totalling 4.9 billion Swiss francs ($6.38 billion) at the end of 2025.
In Washington, a U.S. official told Reuters the U.S. rulemaking notice and the Swiss liquidation action mark a successful collaboration by the two countries that can serve as a model for addressing systemic money-laundering and terrorism-financing risks among Swiss private banks.
The official added that U.S.-Swiss cooperation was not aimed at shutting down more Swiss private banks but bringing them into compliance on these issues, particularly smaller institutions where such risks are higher.
The Treasury decided against employing direct sanctions against MBaer and instead chose a rulemaking notice under Section 311 of the USA Patriot Act because that path would better address core anti-money-laundering deficiencies, the official said.
A Treasury spokesperson said the department will send a senior official to Switzerland on Monday and Tuesday to meet with government and private-sector officials to discuss deeper U.S.-Swiss banking cooperation to fight money-laundering and illicit finance threats. The official was not identified.
BOARD OF DIRECTORS RESIGNED
MBaer said in a statement it is now in liquidation and represented solely by the appointed liquidators, Daniel Staehelin and Lukas Bopp of law firm Kellerhals Carrard Basel KlG. The board of directors has resigned, the bank added.
The bank said it had sufficient assets to satisfy all clients and creditors in full. However, after the U.S. intervention and the revocation of its licence, transaction restrictions mean it can currently make payments only in Swiss francs and up to 100,000 francs ($130,106.69) per client.
FINMA said it had started enforcement proceedings against MBaer in 2024. These proceedings ended three weeks ago, but due to an MBaer appeal, which the bank withdrew on Friday, FINMA had been unable to implement the wind-down plans.
A raft of international sanctions have been imposed on Russia since its invasion of Ukraine, and Iran has been heavily sanctioned by the U.S. for years. U.S. Treasury Secretary Scott Bessent said on Thursday that banks should be "on notice" that the Treasury will use the "full force of our authorities" to protect the integrity of the U.S. financial system.
($1 = 0.7684 Swiss francs)
(Reporting by Linda Pasquini, David Lawder, Dave Graham and John O'Donnell, writing by Elizabeth Howcroft, editing by Thomas Seythal, Louise Heavens, Rod Nickel)
