The Swiss Financial Market Supervisory Authority FINMA has concluded an enforcement proceeding against Julius Bär in connection with private debt loans granted to a European group and client relationships involving two Russian politically exposed persons (PEPs). The regulator established that the institution committed serious violations of supervisory provisions, specifically regarding risk management requirements and anti-money laundering obligations. This marks the fifth enforcement proceeding FINMA has concluded against Julius Bär in less than ten years. While the bank implemented numerous immediate measures during the proceeding, further measures have now been ordered to ensure that planned improvements to compliance and risk culture are implemented effectively and sustainably.
In December 2024, FINMA initiated an enforcement proceeding concerning several loans granted to entities of a European group and its founder. This followed extensive immediate measures imposed in June and December 2023 and May 2024 in response to weaknesses in lending practices, anti-money laundering procedures, and risk management, alongside a high risk appetite. In August 2025, FINMA opened another enforcement proceeding investigating possible anti-money laundering breaches involving clients linked to two Russian PEPs, with immediate measures following in September 2025. Because both cases concerned shortcomings in risk management and culture, FINMA combined the two proceedings.
From 2018, Julius Bär developed a private debt business where loans were generally secured by unlisted shares rather than traditional collateral. Starting in September 2019, the bank granted eight loans to the European group and its founder, with total values exceeding the CHF 1 billion mark in 2022 and 2023. FINMA found that the bank lacked proper organizational and staffing equipment, adequate internal regulations, effective control mechanisms, and sufficient trained staff for this business, which fell outside the strategy of a bank specializing solely in private banking. The bank ignored warning signs, disregarded individual debtor limits, and breached concentration risk reporting requirements. Conflicts of interest and misguided incentives led employees and external intermediaries to earn millions in salaries and commissions. The bank facilitated opaque equity transactions and persuaded the client group to carry out a EUR 60 million pass-through transaction, resulting at the end of 2022 in a loan portfolio that did not reflect economic realities. An outstanding exposure of CHF 586 million at the end of 2023 was written down in full.
FINMA also identified serious anti-money laundering breaches and risk management shortcomings regarding the clients linked to the two Russian PEPs. Despite high risks, the bank failed for several years to adequately verify and scrutinize the origin of assets, critically review negative media reports and suspicious behavior, and comply with reporting obligations under the Anti-Money Laundering Act. In 2019, the bank made an exception to its rules via a Know Your Client Exception to Policy endorsement by an employee who had close personal ties to the PEP family, an approach left unquestioned during subsequent reviews.
Since 2017, FINMA has identified serious supervisory breaches in five enforcement proceedings against Julius Bär. Despite similar shortcomings, the bank previously failed to bring about the necessary changes in its risk and compliance culture. Julius Bär has now taken measures including redefining its risk appetite in 2025 to gradually divest from incompatible clients and assets, discontinuing its private debt business, reducing lending, strengthening control functions, overhauling remuneration, and initiating cultural transformation. FINMA recognized changes in personnel at the Board of Directors and Executive Board level over the past two years and a fundamental overhaul of corporate governance, noting the current management team was appointed after the breaches occurred.
Due to the changed risk situation and implemented measures, FINMA lifted or relaxed previous immediate measures concerning capital, liquidity, lending restrictions, and new business relationships with PEPs from high-risk countries. To ensure sustainable improvements, FINMA ordered specific measures, including requirements for the bank to submit reports to FINMA up until 2032 detailing its risk, error, and compliance culture.
