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The private bank Julius Baer’s announcement on Monday morning was rather dry: They had reached an agreement with the US Department of Justice and paid $ 79.7 million to end investigations into corrupt FIFA funds. .
Behind the announcement is a money laundering scandal that rocked the Swiss financial center in a way that it has not in a long time. For years, the bank has accepted funds from dubious sources without complying with legal provisions on the fight against money laundering.
As far as we know today, the bank not only acted as a compliance aide for FIFA, but also for the Venezuelan government and Brazilian oil company Petrobras. Estimates of the total amount of money involved run to several hundred million francs.
First greed, then harm
All the bad behavior of the bank dates back to when Boris Collardi was the boss. He joined the company in 2009 and switched to the private Pictet bank in 2017. During this time, he practically doubled the share price and earnings, mainly through acquisitions, to more than 800 million francs. According to the annual report, Collardi earned around 56 million francs during this time.
Post-processing from the Collardi era cost the bank around 100 million francs, according to Julius Baer. Thousands of customer files had to be reviewed for money laundering risks. Not counting the damage to the image.
Finma lets the big boys run
The Financial Market Authority (Finma) let Collardi go too long. He only intervened when information from the United States judiciary could no longer be ignored. Finma’s main task is to secure the financial market. That is why it is often sufficient for a bankrupt institution to improve internal supervision and control. Your penalty options are modest and are limited to collecting profits or professional bans for failing bankers; the Federal Department of Finance talks about fines.
But Finma could do more. They rarely focus on bosses, even though they dictate the internal culture when it comes to suspected money laundering cases. Compliance employees who review transactions are primarily followed. Unlike your bosses, you can prove specific misconduct if they don’t report suspected cases. They are then threatened with prosecution for not reporting.
Internal inspectors are threatened with a professional ban
Compliance employees must report suspected cases to the money laundering reporting office. If they fail to do so, they face severe penalties and years of procedures, as in the case of a UBS employee who overlooked a suspicion regarding Petrobras because she was overwhelmed by the large number of transactions, or in the case of an inspector in Vontobel, as It was money from a person close to Gaddafi whose name was not recognized by the internal control system. The fine was low, 2,000 and 3,000 francs, respectively, but they get rid of their jobs and careers forever.
Proceedings against compliance employees could also crop up at Julius Baer. The incidents were so serious that even former Chief Collardi could now be the target. The public will never find out, at best, at best from a little marginal note in the business press when it says: Boris Collardi leaves the private Pictet bank at his own request and mutual consent.
