By Elsie Kamsiyochi
WASHINGTON/ZURICH, — The United States has escalated pressure on Switzerland’s financial sector by threatening to cut off **MBaer Merchant Bank AG** from the U.S. financial system, citing alleged violations of sanctions involving Iran, Russia and Venezuela.
The action, announced by the U.S. Treasury Department, represents one of the most severe enforcement tools available to American authorities — a move that could effectively isolate the Zurich-based private bank from global dollar transactions.
Allegations of Illicit Financial Activity
According to the Treasury, MBaer and certain employees allegedly facilitated the movement of more than $100 million through the U.S. financial system on behalf of actors linked to sanctioned entities. These include individuals and organizations tied to Iran’s Islamic Revolutionary Guard Corps (IRGC) and its elite Quds Force, as well as networks connected to Russian and Venezuelan interests.
Treasury officials claim the bank enabled money laundering and potential terrorist financing, and helped conceal transactions through the use of shell companies. Among the transactions highlighted were payments linked to Venezuela’s state oil company, PDVSA, involving the sale of millions of barrels of crude oil in violation of U.S. sanctions.
Neither PDVSA nor Venezuelan authorities immediately commented on the allegations.
Treasury’s Most Powerful Sanctions Tool
U.S. Treasury Secretary **Scott Bessent** warned that the government would use “the full force of our authorities” to safeguard the integrity of the American financial system.
At the center of the action is a proposed rule by the Treasury’s Financial Crimes Enforcement Network (FinCEN) that would bar U.S. financial institutions from opening or maintaining correspondent accounts for MBaer. Such a restriction would effectively sever the bank’s access to U.S. dollar clearing — a cornerstone of international finance.
This measure, established under post-9/11 anti-money-laundering legislation, is rarely deployed against institutions in advanced economies. Data from FinCEN suggests it may be the first time such a step has been threatened against a Swiss bank.
The last comparable European case was Latvia’s ABLV Bank, which collapsed in 2018 after U.S. authorities accused it of large-scale money laundering and sanctions breaches.
Swiss Regulatory Response
Switzerland’s financial regulator, FINMA, confirmed it has been in contact with both MBaer and U.S. authorities. FINMA recently concluded its own enforcement proceedings against the bank but said that an appeal by MBaer has temporarily blocked the implementation of regulatory measures. In the interim, the regulator has appointed an audit agent to monitor the bank’s activities.
MBaer stated that it is cooperating fully with Swiss authorities and continues to operate with what it described as a solid capital and liquidity base. The bank emphasized that client interests and regulatory compliance remain its top priorities.
Founded in 2018 by Michael Baer — a former executive board member of the larger Swiss private bank Julius Baer — MBaer reportedly manages around 3.5 billion Swiss francs in assets. FinCEN noted that Russian clients account for a significant portion of those assets, including individuals subject to U.S. sanctions.
Strategic and Political Implications
Experts say the move carries symbolic weight beyond the size of the institution involved. Professor Michael Levi, a specialist in international money laundering at Cardiff University, described the action as a “strategic signal” aimed at discouraging financial institutions worldwide from facilitating transactions linked to U.S. adversaries.
Targeting a bank in a G10 country such as Switzerland underscores Washington’s willingness to pursue sanctions enforcement beyond traditionally high-risk jurisdictions. However, analysts note that MBaer’s relatively small footprint may limit broader systemic consequences.
The timing also comes amid delicate economic relations between Washington and Bern. After imposing steep tariffs on Swiss goods last year, the U.S. later negotiated reductions aligned with European Union levels. Officials aim to finalize that accord by the end of March, adding diplomatic sensitivity to the unfolding case.
Next Steps
FinCEN has opened a 30-day public comment period on the proposed rule. If finalized, U.S. financial institutions would be legally barred from maintaining correspondent banking relationships with MBaer — a move that could significantly curtail the bank’s ability to conduct international transactions.
For now, MBaer faces mounting legal and reputational challenges, as both U.S. and Swiss authorities intensify scrutiny of its operations.
The case highlights the continued global reach of U.S. sanctions enforcement and reinforces Washington’s message that access to the dollar-based financial system comes with strict compliance expectations.
Source Reuters
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