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The U.S. Treasury has threatened the private Swiss bank MBaer Merchant Bank AG with an effective cutoff from the American financial system, accusing it of violating sanctions on Russia, Iran, and Venezuela, according to a Feb. 26 Reuters report. If the measures are enacted, U.S. financial institutions would be barred from opening or maintaining correspondent accounts with MBaer, effectively blocking the Swiss bank’s access to dollar clearing, which could paralyze its international operations.
According to American officials, MBaer and its employees facilitated money laundering and corruption schemes linked to Venezuelan and Russian entities, and also carried out transactions on behalf of Iran’s Islamic Revolutionary Guard Corps and its Quds Force, which are under U.S. sanctions.
U.S. Treasury Secretary Scott Bessent said MBaer “has funneled over a hundred million dollars through the U.S. financial system on behalf of illicit actors tied to Iran and Russia.” Bessent added that Washington would “aggressively protect the integrity of the U.S. financial system using the full force of our authorities.”
The Treasury’s Financial Crimes Enforcement Network anti-money-laundering bureau, known as FinCEN, published a notice of a proposed rule change and opened a 30-day public comment period. The agency said MBaer had used shell companies to conceal the beneficial owners of transactions, including deals linked to Venezuela’s state oil company PDVSA. FinCEN said this involved the sale of millions of barrels of oil in circumvention of U.S. sanctions since 2020.
The notice also highlighted the significant share of Russian clients in the bank’s portfolio, including sanctioned individuals. According to FinCEN, “accounts belonging to Russian persons likely represent the largest portion of its assets under management.” American officials linked the bank to “illicit activities,” including money laundering that benefited Russian and Ukrainian politicians and businessmen with ties to the Kremlin.
MBaer said it would comment on the Treasury’s announcement after consulting with U.S. lawyers. The bank said it is cooperating with Swiss regulators, has a “solid capital and liquidity base,” and continues operating “to the extent possible.” «The interests of its clients and compliance with regulatory requirements are MBaer Merchant Bank AG's highest priorities,» the bank announced.
Swiss financial regulator FINMA said it is in contact with the bank and the U.S. authorities. FINMA’s own proceedings concluded three weeks ago, but the regulator has not yet been able to impose its measures, as the bank has filed an appeal. MBaer has also been assigned an external auditor to monitor the situation.
FinCEN said this is the first time the United States has threatened to use a measure of this kind — introduced after the Sept. 11 attacks — against a Swiss bank. The most recent European bank effectively cut off from the dollar system was Latvia’s ABLV, which closed in 2018 after allegations of money laundering and sanctions violations.
MBaer was founded in 2018 by Michael Baer, a former board member of Julius Baer. In an interview with the Swiss outlet Finews in October 2023, Baer said the bank had about 3.5 billion Swiss francs under management.
Washington has traditionally closely monitored Swiss banks’ compliance with sanctions. Last year, Donald Trump’s White House initially imposed the highest trade tariffs in Europe on Switzerland before an agreement was reached to reduce them to the European Union level. The sides expect to finalize the agreement by the end of March.
Earlier this week, Switzerland brought into force the remaining measures from the EU’s 19th Russia sanctions package. They include a complete ban on purchasing and importing Russian LNG starting from April 25 (with a transition period for existing long-term contracts until the end of 2026), as well as a ban on providing all crypto services to Russian citizens and companies and a ban on transactions involving certain ruble-backed cryptocurrencies such as the A7A5 stablecoin.
The measures also include certain trade restrictions, such as bans on the sale to Russia of certain metals used in weapons systems and of products used to manufacture fuels. Switzerland also introduced an obligation for Russian diplomatic staff accredited in the EU to give advance notice if they are transiting through or entering the country — similar to measures earlier adopted by Brussels.