Thursday, October 29, 2020

Swiss regulator condemns Julius Baer for serious money laundering failures


Switzerland’s financial markets watchdog has found serious shortcomings in Julius Baer’s efforts to combat money laundering over nearly a decade, appointing an auditor and prohibiting the bank from doing large deals.

Watchdog FINMA said the failings between 2009 and early 2018 were connected to alleged cases of corruption linked to Venezuelan oil company PDVSA and world soccer body FIFA, resulting in enforcement proceedings which FINMA had now concluded.

FINMA had conducted inspections at several Swiss banks in relation to these cases and appointed an agent to investigate Julius Baer in 2017.

It broadened its probe into Switzerland’s third-largest listed bank in 2018 following the arrest of a Baer client adviser in the United States and in response to events in Venezuela.

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FINMA said the bank had to take effective measures to identify client advisers whose portfolio carries a high money-laundering risk and also adjust its pay and disciplinary policy to help avoid unreasonable risk-taking.

It barred Baer from large and complex acquisitions until it fully complied with the law.

An independent auditor would supervise the implementation of the measures, FINMA said.

Julius Baer acknowledged FINMA’s conclusions in a statement.

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“We accept FINMA’s findings and regret the shortcomings identified in our business with Latin American clients. This is not compatible with the risk culture that we are striving to achieve,” Julius Baer Chairman Romeo Lacher said.

Julius Baer said it had taken comprehensive measures to strengthen its compliance and risk culture – progress FINMA acknowledged in its statement – and would “rapidly and resolutely” enforce implementation of the measures.

The bank last year appointed company insider Philipp Rickenbacher as chief executive, replacing Bernard Hodler, its former risk chief who took over when predecessor Boris Collardi abruptly left in 2017 to run unlisted rival Pictet.

Pictet, where Collardi is a managing partner and joint head of wealth management, declined to comment. Picted also said Collardi, who became Baer’s CEO in 2009 and oversaw its rapid growth, declined to comment.

Julius Baer has said under its new CEO its focus would shift from attracting new money to sustainable profit growth. It also installed new leadership in Latin America in December 2017 and closed its business in Panama and Venezuela.

The bank’s shares fell 2% in early trading.


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