Introduction
The U.S. Treasury has taken a rare and highly consequential step against MBaer Merchant Bank AG, proposing to restrict the Swiss private bank’s access to the U.S. financial system. U.S. officials allege the bank and certain employees enabled money laundering and sanctions evasion connected to Iran, Russia, and Venezuela. If finalized, the measure could effectively isolate MBaer from dollar clearing and correspondent banking, a threat that has historically proven severe for banks targeted by similar actions.
What the Treasury Is Proposing
The Treasury’s Financial Crimes Enforcement Network, FinCEN, issued a notice of proposed rulemaking that would prohibit covered U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, MBaer. The proposal uses a mechanism available under Section 311 of the USA PATRIOT Act, which allows FinCEN to apply “special measures” when it finds reasonable grounds to conclude a foreign financial institution is of primary money laundering concern.
FinCEN is proposing the most restrictive option, often described as the highest tier of special measures, which would block the bank’s ability to access the U.S. financial system through correspondent relationships. The comment period is set at 30 days, after which the rule could be finalized.
Allegations Tied to Iran, Russia, and Venezuela
U.S. authorities allege MBaer facilitated illicit activity spanning multiple jurisdictions and actors, including money laundering and terrorist financing linked to Iran’s Islamic Revolutionary Guard Corps and its Quds Force. The Treasury also alleges facilitation of corruption-linked flows and laundering tied to Russian and Venezuelan money movements.
FinCEN’s description includes the alleged use of shell companies to conceal beneficial owners and references transactions linked to Venezuela’s state oil company PDVSA dating from 2020, connected to the sale of millions of barrels of crude oil in violation of U.S. sanctions. FinCEN also highlights a concentration of clients tied to Russia, including individuals subject to sanctions, and claims that accounts associated with Russian persons likely represent the largest portion of the bank’s assets under management.
Why This Tool Matters for Banks
The U.S. dollar sits at the core of global finance, and U.S. restrictions on correspondent banking can quickly become existential for a firm that depends on cross-border payments and global counterparties. The measure being proposed is widely viewed as one of the most powerful levers in U.S. financial enforcement because it can sever a bank’s practical access to dollar-based transactions even without a formal criminal conviction.
A recent European precedent often cited in this context is Latvia’s ABLV, which was shut down in 2018 after U.S. authorities accused it of money laundering and sanctions breaches. The MBaer case is notable because it applies this type of pressure to a bank in a major advanced economy, even if the institution itself is comparatively small.
Swiss Regulatory Response and MBaer’s Position
Switzerland’s financial regulator FINMA said it is in contact with the bank and U.S. authorities and that it concluded its own enforcement proceedings recently. Due to an appeal by MBaer, FINMA said it could not implement its measures but has appointed an audit agent to monitor the bank during ongoing legal proceedings.
MBaer said it would comment after consulting U.S. counsel, stated it is cooperating with Swiss authorities, and said it maintains a solid capital and liquidity base while proceeding with business activities to the extent possible.
Background on MBaer
MBaer was established in 2018 by Michael Baer, a former executive board member at Julius Baer. Public reporting has previously indicated the bank managed roughly 3.5 billion Swiss francs in assets under management, underscoring its niche scale relative to Switzerland’s largest private banking groups.
Conclusion
The U.S. proposal to restrict MBaer’s correspondent access signals an escalated enforcement posture that uses dollar access as a compliance pressure point. The immediate implications depend on whether the rule is finalized after the comment period and how counterparties react in the interim. For MBaer, the core risk is functional isolation from the dollar system. For Swiss oversight, the case raises renewed scrutiny over sanctions compliance, client due diligence, and the effectiveness of supervisory tools when cross-border enforcement moves faster than domestic proceedings.