Switzerland Shuts Down Bank Over $100 million Iran and Russia Sanctions Breaches

• Swiss authorities have revoked the license of MBaer Merchant Bank AG over evidence it helped clients evade sanctions, saying it had been a risk to the country and its financial system.
• The Swiss regulator also said that it opened proceedings against four individuals who may have been responsible for the matters under investigation.
• The move comes as the United States signalled unprecedented measures to cut the bank off from the US financial system, citing national‑security risks over alleged illicit financial flows linked to Iran and Russia.
• It is alleged that the bank had funnelled over $100 million through the US financial system for criminal networks tied to Iran’s Islamic Revolutionary Guard Corps and Russian actors
• It is also alleged that along with violating Russia-related sanctions and links to Iranian terrorist organizations, MBaer played a “key role” in handling funds tied to corruption schemes of Venezuela’s state-owned oil company since 2020,  

Regulators Cite Systematic AML and Sanctions Failures

• According to Switzerland’s financial regulator, FINMA, MBaer Merchant Bank’s operations exhibited profound structural weaknesses that enabled clients to evade sanctions and asset freezes. Regulators described the bank’s compliance failures as so severe and pervasive that liquidation was the only viable remedy. FINMA confirmed that its decision followed MBaer's withdrawal of its appeal, allowing the liquidation order to take immediate effect. [thelocal.ch]
• Separately, investigative reporting revealed that FINMA had identified a large proportion of high-risk clients within the bank’s portfolio, with indications that MBaer staff actively assisted sanctioned clients in circumventing restrictions, some 98% of assets reportedly derived from high-risk sources. [thelocal.ch]

US Treasury: MBaer Was a “Critical Access Node” for Illicit Actors

• The US Treasury’s Financial Crimes Enforcement Network (FinCEN) had earlier proposed a federal regulation prohibiting US institutions from conducting any business with MBaer.
• The proposal followed allegations that the bank had funnelled over $100 million through the US financial system for criminal networks tied to
• Iran’s Islamic Revolutionary Guard Corps and
• Russian actors. [apnews.com]
• US officials said MBaer served as a critical dollar‑access route for illicit actors, undermining both national security and the integrity of the global financial system.
• US Treasury Secretary Scott Bessent warned that the case should signal to all banks that US authorities will use their full powers to protect the financial system from abuse. [thehill.com]

International Repercussions and Enforcement Momentum

• The shutdown marks one of the most forceful cross-border enforcement actions involving a Swiss bank in recent years. The case unfolded alongside broader geopolitical tensions, including renewed sanctions against Iran and Russia, and ongoing multilateral negotiations concerning Tehran’s nuclear programme.
• FinCEN’s threat to isolate MBaer from the global dollar system, effectively a financial “death sentence”, appears to have sharpened FINMA’s enforcement posture. Reports indicate that the Swiss regulator and FinCEN maintained contact throughout the proceedings, underscoring unprecedented cooperation between US and Swiss authorities on sanctions enforcement. [thehill.com]

A Bank Founded on Heritage, Ended by Compliance Failures

• MBaer Merchant Bank, founded in 2018 by Michael Baer, descendant of the Julius Baer banking dynasty, had positioned itself as a boutique institution serving international private clients.
• But its rapid growth in high-risk clientele and inadequate AML framework ultimately placed it in regulators’ crosshairs.
• By late 2025, the bank reportedly held $6.4 billion in assets across 700 clients, the overwhelming majority of whom were considered high-risk. [thelocal.ch]
• The collapse underscores a broader trend: regulators worldwide are imposing harsher penalties on banks that inadvertently facilitate illicit financial flows. In this case, the combination of Swiss enforcement and US extraterritorial pressure proved decisive.

What Happens Next?

• Liquidators have now been appointed to unwind MBaer’s operations.
• With FinCEN’s proposed rule still pending finalisation, the case may serve as a template for future cross-border sanctions enforcement actions, especially against smaller financial institutions providing niche access to global payment systems.
• For the international compliance community, the MBaer shutdown stands as a stark reminder: weak AML controls can trigger not only regulatory sanctions but also the complete dissolution of a bank.

Long read

• Swiss authorities revoked the license of MBaer Merchant Bank AG over evidence it helped clients evade sanctions, saying it had been a risk to the country and its financial system.
• The announcement from financial regulator FINMA comes a day after the US proposed cutting off MBaer from its financial system because of alleged links to Iran and Russia.
• Along with violating Russia-related sanctions and links to Iranian terrorist organizations, MBaer played a “key role” in handling funds tied to corruption schemes of Venezuela’s state-owned oil company since 2020, according to the document detailing the findings by FinCEN.
• The Treasury’s Financial Crimes Enforcement Network said that MBaer has been working with customers that engage in money laundering and that executives and employees were likely complicit in in some activities.
• “The case is extremely serious,” FINMA said in a statement Friday. “Through its conduct and inadequate organization,” MBaer “has exposed itself and the Swiss financial centre to disproportionately high risks.”
• The regulator said it found “systematic shortcomings” in MBaer’s compliance with rules.
• The bank “does not have an adequate structure in place for combating money laundering” and so enabled clients to circumvent official asset freezes. It said its liquidation order against MBaer is now effective after the bank dropped an appeal.
• MBaer was fighting FINMAs decision in court but decided to give up after the threat of US sanctions Thursday, a representative for the bank said in a statement.
• It confirmed it’s “in liquidation,” with Annett Viehweg continuing to serve as chief executive, supervised by the liquidators.
• The bank said has sufficient assets to satisfy all clients and creditors in full, though noted it can only make payments of as much as 100,000 Swiss francs per client given the US intervention and the revocation of its license.
• At the end of 2025, the bank held client assets totalling 4.9 billion Swiss francs ($6.4 billion), maintained almost 700 client relationships and had over 60 employees, according to FINMA, which said it had been investigating MBaer since 2024.
• The supervisor found that 80% of the business relationships carried increased risks. Most recently, 98% of the assets received came from high-risk clients.
• The regulator also said that it opened proceedings against four individuals who may have been responsible for the matters under investigation.
• It’s the first time a Swiss bank has shown up in a list of companies and countries designated by FinCEN as being of “primary money laundering concern,” according to a Bloomberg review of the agency’s website.
• The move also comes during a time of heightened tensions between Switzerland and the US over tariffs imposed by the Trump administration.

Sources

• https://www.swissinfo.ch/eng/swiss-bank-mbaer-gets-shut-down-over-alleged-sanction-breach/91010974
• https://globalinvestigationsreview.com/just-sanctions/article/switzerland-shuts-down-bank-accused-of-iran-russia-sanctions-breaches
• https://www.thelocal.ch/20260228/switzerland-shuts-bank-accused-of-iran-russia-ties
• https://apnews.com/article/treasury-sanctions-swiss-bank-iran-russia-fcad66cfcb6c2e80a733fc94680ad565
• https://thehill.com/homenews/administration/5757763-treasury-threatens-mbaer-swiss-bank/