The Swiss Financial Market Supervisory Authority has investigated various people who worked at Julius Baer for serious anti-money laundering failings. It has decided to proceed against one of them and not to proceed against another, while reprimanding two people in writing.
FINMA has reprimanded the pair in writing. The one it has decided not to punish has declared his or her intention to avoid managerial positions at financial institutions in future.
In February of last year, according to a spokesman for FINMA who conversed with Compliance Matters, "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." These and other breaches of anti-money laundering regulations at Julius Baer were to do with cases of corruption in Venezuela, among other things.
These investigations concentrated on four high-ranking managers. Apart from the ones mentioned above, FINMA has reprimanded two others. To issue an industry ban, FINMA must be able to prove that the target has direct, individual and causal responsibility for a serious violation of supervisory law. This was absent in the case of the two reprimanded managers.
The five-year ban
In the United Kingdom, the Financial Conduct Authority can ban anyone it sees fit from the financial world for life. If the subject of such a ban wants to overturn it, he is not allowed to go anywhere near a real court. Instead, he can only appeal to a tribunal.
FINMA, by contrast, can only ban people from financial services for five years. It can also bar them from certain activities, while letting them get on with others. It tends to forego such a ban if it is confident that the person in question has left the supervised financial sector for good. Since 2014, FINMA has banned around 60 managers, great and small, from the industry.
When Compliance Matters asked the spokesman whether even the worst offender could return to finance after a five-year ban, he said that this was theoretically possible but added that in the last two or so years the rules had changed and that FINMA was now obliged to give prior approval to everybody who wanted to join every board. This, he said, meant that it had to be satisfied that he was 'fit and proper' to do a board-level job at that particular type of institution. He added: "I can't imagine a man who was banned for five years being made the CEO of a bank. It's always done on a case-by-case basis. Someone who's fit to head up a small bank might not be fit to be the CEO of UBS or some other systemically relevant bank."
The spokesman said that in the past, before prior approval was mandatory and banks had to inform FINMA about appointments in advance, questionable people might have sat on the board of a bank before FINMA came to perform a routine inspection or to act on a tip-off and thereupon decided that they lacked fitness and propriety, ousting them in the process. He also said, however, that even then banks usually informed FINMA of their new appointments out of eagerness to please.
Anybody who is the subject of any unwelcome decision by FINMA can, unlike his British counterpart, appeal to an actual court. At the first instance he can go to the Federal Administrative Court of Switzerland (Tribunal administratif fédéral) in St Gallen. Any appeals from that go to the Swiss Federal Tribunal (Tribunal Fédéral) in Lausanne, which is the Swiss federal supreme court. The Swiss use of the word 'tribunal' to mean 'court' is, as seen here, slightly confusing for Anglo-Saxon readers.
Proceedings against five banks in the context of PDVSA
FINMA has been in contact with more than 30 Swiss banks in connection with allegations of corruption linked to the state-owned Venezuelan oil company Petroleos de Venezuela (PdVSA). FINMA investigated and ultimately opened five enforcement proceedings (see here and here for the outcomes of two of them). Two proceedings are still outstanding.