WASHINGTON/ZURICH, Feb 26 (Reuters) – The U.S. Treasury Department on Thursday threatened to 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, Russia and Venezuela.
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.
TREASURY ALLEGES BANK FACILITATED CORRUPTION
The Treasury alleged MBaer and its employees had facilitated corruption linked to Venezuelan and 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 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 Treasury proposed a rule change that, if finalised, would prohibit covered U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, MBaer.
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.
The Treasury’s Financial Crimes Enforcement Network anti-money laundering bureau published a notice of proposed rulemaking that invites written comments for 30 days on the plan to cut off the small Swiss private bank from the U.S. dollar-based financial system.
FinCEN said in the notice that for years, MBaer “has directly or indirectly facilitated money laundering for or on behalf of illicit actors, including through processing transactions related to Venezuelan corruption and Russian and Iranian illicit activities.”
Swiss financial market supervisor FINMA said it was in contact with the bank and U.S. authorities, adding it concluded its own enforcement proceedings against MBaer three weeks ago. FINMA said the outcome of its enforcement was not legally binding as an appeal submitted by the bank is pending before the Swiss Federal Administrative Court.
Due to the pending appeal, FINMA was unable to implement its own measures at MBaer but has appointed an audit agent as a monitor at the bank, it added.
In an interview with MBaer’s founder, Michael Baer, published in October 2023, Swiss news site Finews indicated the bank had 3.5 billion Swiss francs in assets under management.
(Reporting by Daphne Psaledakis and David Lawder; Ariane Luthi, John O’Donnell, Tommy Reggiori Wilkes; Editing by David Ljunggren, Rod Nickel)
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