Switzerland is notorious for its banking system, not just for the excellence and accuracy that banks pledge to their customers but also for the anonymity they provide to them. In 1934, The Swiss Banking Law made it a criminal offence for Swiss banks to disclose the name of account holders. The protections and liberties provided by this financial veil has led to many unethical clients seeking refuge with large Swiss banks.
Over time, the “moral greyness” these clients are knows for, infected the large banks, creating scandal after scandal. From Zurich’s e-bank fraud to Credit Suisse’s corporate espionage, Switzerland has become a playground for wealthy criminals. Recently added to this lengthy list of misconduct was Swiss bank, Julius Baer.
The Swiss Financial Market Supervisory Authority (FINMA) keeps a watchful eye over the world of Swiss banking. Recently, FINMA discovered a history of “irregularities” stretching all the way back to 2009. In January 2021, FINMA published a report based on an investigation into four previous employees of Julius Baer which began in 2017, broadening its inquiries in 2018 after the arrest of a Baer-employed banker in the United States.
Two former chief executives, Boris Collardi and Bernhard Holder, were reprimanded by FINMA in connection with a large and intricate money laundering operation across South America. As for Julius Baer, FINMA told the company to comply with the law and forbade any acquisitions until the company heeded FINMA’s warning. Further, an auditor has been formally appointed to oversee the group. However, FINMA declined to impose a financial penalty on the company. No money was confiscated from the bank, nor were they ordered to compensate for the laundered money accrued over the course of its operation in South America.
The fraud that FINMA is accusing past employees of is thought to have stemmed back to 2009, when Boris Colardi was appointed chief executive officer. Being the youngest executive in Julius Baer history, he brought with him passion, ambition and a youthful disregard for regulation. He aggressively grew the bank with nearly a dozen acquisitions and joint ventures. After his sudden resignation in November 2017, a few eyebrows were raised to the integrity of Julius Baer’s expansion.
A money laundering scandal linked to cases of corruption surrounding Petroleos de Venezuela S.A, a nationalised oil company in Venezuela and further corruption relation to FIFA was discovered by Swiss authorities. FINMA released a statement acknowledging that a 70 million Swiss franc transfer was accepted from a Venezuelan customer in 2014 despite knowing that this customer was accused of previous corruption. The FIFA case relates to an Argentine employee of Julius Baer, who facilitated payments from a sports marketing company to FIFA officials. This is allegedly the same scandal that led to former president Sepp Blatter and former vice-president Michel Platini being banned from soccer in 2015 over illicit payments.
In a press release by Julius Baer, the Swiss bank shifted some of the blame of the matter to past employees, although it did admit to the overall wrongdoing as well. Collardi and Hodler, along with a third unnamed subject of investigation, have appeared to accept their reprimands and possibly face more serious charges by FINMA in the future. A fourth subject of the probe (also unnamed) has been resolved without sanction, with the employee agreeing to retire from the financial services industry.
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