By PAUL O’DONOGHUE, Senior Correspondent
THE U.S. Treasury Department has proposed a rule that, if finalized, would sever MBaer Merchant Bank AG’s access to the U.S. financial system on the grounds the Swiss bank had supported illicit actors linked to Iran and Russia.
The Treasury alleged MBaer and its employees had facilitated corruption linked to Russian money laundering. It also alleged money laundering and terrorist financing on behalf of Iran’s Islamic Revolutionary Guard Corps and its Quds Force, which are sanctioned by the U.S.
“MBaer has funneled over a hundred million dollars through the U.S. financial system on behalf of illicit actors tied to Iran and Russia,” Treasury Secretary Scott Bessent said in a statement. “Banks should be on notice that the U.S. Treasury will aggressively protect the integrity of the U.S. financial system. Using the full force of our authorities.”
The move is rare and unleashes the most powerful tool in sanctions enforcement by the United States on a Swiss bank. MBaer did not immediately reply to a request for comment.
The U.S. is the world’s most powerful regulator chiefly because it can sever a bank’s access to the dollar, a cornerstone of international finance.
The last bank in Europe to suffer such a fate was Latvia’s ABLV, which was shut in 2018 when U.S. authorities accused it of money laundering and U.S. sanctions breaches.
FINMA statement
FINMA, Switzerland’s financial regulator, said that it “has appointed an audit agent” at MBaer.
“Three weeks ago, FINMA concluded enforcement proceedings against MBaer Merchant Bank AG concerning, among other things, anti-money laundering rules and risk management in the area of sanctions,” it said in a statement.
“The ruling is not yet legally binding. An appeal submitted by the bank is pending before the Swiss Federal Administrative Court.
It added: “The court has ordered accompanying measures for the duration of the legal proceedings. Due to the pending appeal proceedings, FINMA was unable to implement its own measures at MBaer Merchant Bank AG. However, it has appointed an audit agent as a monitor at the bank.”
FINMA added that it is in contact with FinCEN, the Treasury’s AML unit, about the issue.
FinCEN notice on MBaer bank
FinCEN has published a notice of proposed rulemaking.
The move which would prohibit U.S. financial institutions from “opening or maintaining a correspondent account for, or on behalf of, MBaer”.
FinCEN also said U.S. financial institutions cannot process transactions linked to MBaer.
The document states: “MBaer has facilitated money laundering for, or on behalf of, illicit actors.”
It said this included “processing transactions related to Venezuelan corruption. And Russian and Iranian illicit activities”.
The Treasury added that those interested can submit comments on the proposal “within 30 days of its publication in the Federal Register.”
Established in 2018, MBaer is a private bank with a single office headquartered in Zurich, Switzerland. The lender markets itself as a bank for entrepreneurs.
Swiss investors own the majority of the company. The firm also has “minority shareholders based in Asia and the Middle East”, according to FinCEN.
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