Switzerland's MBaer Bank Faces FINMA Wind-Down Amid U.S. Pressure over Sanctions

Switzerland's financial regulator FINMA is winding down MBaer Merchant Bank AG due to money-laundering violations and sanction breaches linked to Iran and Russia. The U.S. Treasury alleged the bank facilitated illicit activities, prompting a collaboration between U.S. and Swiss authorities to address systemic financial risks.

Switzerland's financial regulatory body, FINMA, announced it will wind down MBaer Merchant Bank AG after the U.S. threatened to sever the bank's access to its financial system. The Zurich-based bank is accused of facilitating Russian money laundering and aiding organizations linked to Iran's Islamic Revolutionary Guard Corps.

FINMA identified deficient anti-money-laundering controls, noting that 80% of MBaer's business relationships were high risk. The bank's compliance recommendations were systematically ignored, even executing transactions for clients on sanctions lists, exposing disproportionate risks to the Swiss financial center.

The U.S. and Switzerland have collaborated on addressing these systemic risks, with the U.S. opting for a rulemaking notice over direct sanctions under the USA Patriot Act. MBaer is now in liquidation, with its board resigned and transactions restricted to Swiss francs.

(With inputs from agencies.)