US set to cut Swiss bank off from financial system for ties to Iran and Russian Federation

Swiss MBaer Merchant Bank may lose access to the U.S. financial system due to alleged ties to Iran and Russia, Bloomberg writes . According to the U.S. Treasury Department, its financial crime unit FinCEN is working to approve a rule that would prohibit U.S. financial institutions from opening or maintaining correspondent accounts for or on behalf of MBaer.

The rare move would deploy the toughest tool in the U.S. sanctions enforcement arsenal, Reuters points out . The measure would effectively deny MBaer access to dollar settlements, which could jeopardize its international operations. This is probably the first time the U.S. is going to apply it to a Swiss bank, the agency writes.

Treasury Secretary Scott Bessent said MBaer "funneled more than $100 million through the U.S. financial system for the benefit of illicit actors linked to Iran and Russia," the agency said in a release. MBaer and its employees facilitated corruption schemes involving the laundering of Russian funds, as well as money laundering and terrorist financing for the benefit of foreign terrorist organizations linked to Iran, including the Islamic Revolutionary Guard Corps and its Quds Force unit, the U.S. Treasury Department lists.

As FinCEN clarified , "accounts held by Russian individuals likely account for the largest portion of the bank's assets under management". This includes Russians under sanctions. The statement said that MBaer is involved in money laundering for the benefit of Russian and Ukrainian politicians and businessmen with ties to the Kremlin.

In addition, according to FinCEN, the bank used "shell companies" to conceal the real participants in the transactions, including transactions related to Venezuela's state-owned oil company PDVSA. The agency indicates that these funds were linked to the sale of millions of barrels of Venezuelan oil to circumvent U.S. sanctions.

MBaer "acknowledges receipt of FinCEN's notice and will issue a statement after consulting with U.S. counsel," the bank said.

It is a strategic signal not to help enemies of the U.S., Cardiff University international money laundering expert Michael Levy commented on the U.S. Treasury Department's announcement in an interview with Reuters. The fact that a bank from a G10 country is being pursued amplifies the effect, he said, although MBaer's small size means collateral damage will be limited.

Switzerland's financial regulator Finma separately said it considers MBaer to be a "financial institution of primary money laundering concern" and has appointed a special auditor to the bank.

This article was AI-translated and verified by a human editor