1/1/2024 0 Comments Julius baer![]() Even the previous year, the individual had been awarded a special bonus reserved for ‘top performers’. In 2017, the client adviser’s bonus was reduced by only 2.5%. As an example, a client adviser looking after Venezuelan clients in 20 received bonuses and other remuneration in the millions, even though Julius Baer had reported a number of his clients, on the basis of investigations or suspected wrongdoing in connection with the PDVSA case, to the Money Laundering Reporting Office Switzerland (MROS). The bank’s remuneration system focused almost exclusively on financial targets and paid scant regard to compliance and risk management goals. Inadequate organisation and risk cultureįINMA proceedings furthermore showed that organisational failings and misplaced incentives encouraged breaches of the legal obligations to combat money laundering. The only information provided by the client was that the money would serve to pay for advisory services, about which no further details were given. Finally, in 2017, the bank arranged a pass-through transaction involving several million US dollars for this client without investigating it sufficiently. As an example, a CHF 70 million transaction was carried out in respect of a large Venezuelan client in 2014 without the required investigations, even though the bank had learnt in the same year that the client was facing accusations of corruption. Transactions were not properly monitored or were insufficiently queried, in a period in which Julius Baer was presumably seeing clear warning signs of money laundering activity. For example, information was frequently missing as to how individual clients had come by their wealth, why they wanted to open an account with Julius Baer and what business they were planning to transact. Information contained in KYC (know your customer) documentation was either incomplete or ambiguous for the vast majority of the audited business relationships. Specifically, Julius Baer did not do enough to determine the identities of clients, nor did it establish the purpose or background of its business relationships. FINMA also uncovered systematic failures in risk management at Julius Baer, which repeatedly failed to react to clear indications of possible money laundering risks or did not do so decisively enough. What is more, the offences spanned a period of several years, from 2009 to early 2018. Almost all of the 70 business relationships selected on a risk basis and the vast majority of the more than 150 sample transactions selected on the same basis showed irregularities. ![]() FINMA arrived at its conclusion based on the sheer number of failings. Systematic AML and risk management failingsĭuring its investigation, FINMA uncovered systematic failings to comply with due diligence under the Anti-Money Laundering Act as well as violations of AML reporting requirements. The proceedings, now concluded, found that Julius Baer was in breach of obligations to combat money laundering and its duty to put in place an appropriate risk management policy, representing a serious infringement of financial market law. In 2018, FINMA broadened its investigation following the arrest of one of the bank’s client advisers in the US and in response to events unfolding in Venezuela. Part of this process included the appointment, in 2017, of an agent to investigate Julius Baer. (PDVSA), a Venezuelan state-owned oil company, and FIFA, the world soccer federation. Lastly, FINMA will appoint an independent auditor to monitor implementation of the above-mentioned measures.įINMA conducted inspections at several Swiss banks to ascertain whether anti-money laundering (AML) rules had been upheld in connection with the alleged cases of corruption linked to Petróleos de Venezuela S.A. Furthermore, Julius Baer is prohibited from conducting large and complex acquisitions until it once again fully complies with the law. The Board of Directors must also give greater attention to its AML responsibilities. Moreover, Julius Baer must change the way it recruits and manages client advisers as well as adjusting remuneration and disciplinary policies. FINMA has instructed Julius Baer to undertake effective measures to comply with its legal obligations in combating money laundering and rapidly finalise the measures it has already started putting in place. The shortcomings arose in connection with alleged cases of corruption linked to PDVSA, an oil company, and FIFA, the world soccer federation, resulting in enforcement proceedings on the part of FINMA, which have now concluded. The Swiss Financial Market Supervisory Authority FINMA has found that Julius Baer fell significantly short in combating money laundering between 2009 and early 2018.
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