Julius Baer settles with DOJ over FIFA money laundering scandal

November 9, 2020.
FIFA President Gianni Infantino gestures as he walks on the stage before the start of the 69th FIFA congress in Paris, June 5, 2019. (AP Photo/Alessandra Tarantino)

FIFA President Gianni Infantino gestures as he walks on the stage before the start of the 69th FIFA congress in Paris, June 5, 2019. (AP Photo/Alessandra Tarantino)

reached a deal with the U.S. Department of Justice on Monday, following months of investigations into the private Swiss bank’s involvement in a money laundering and corruption scandal with FIFA, the world soccer governing body.

In the settlement, Julius Baer agreed to pay $79.7 million in penalties, which will be set aside now and reflected in its 2020 financial results. The Zurich-based group will also enter into a three-year deferred prosecution agreement.

Julius Baer said it anticipates that it will soon “execute a final resolution” with the Justice Department. The bank has been cooperating with authorities since 2015, and said it was close to reaching a deal in September of this year to resolve its role in the corruption events that took place in the last decade.

Regulatory proceedings in Switzerland over the scandal were closed in February 2020, and the Swiss Financial Market Supervisory Authority concluded that Julius Baer “fell significantly short in combating money laundering” between 2009 and 2018. 

The bank was banned by the markets watchdog from making large acquisitions until it properly complied with a new set of sanctions. Julius Baer said it has been working to remediate several identified shortcomings since 2016.

“Measures already taken include de-risking the business by re-documenting each one of the bank’s client relationships and discontinuing certain individual relationships and operations not commensurate with Julius Baer’s risk appetite; renewing and strengthening the entire risk organization; as well as introducing an enhanced code of ethics and business conduct,” Julius Baer said Monday.

Following a DOJ corruption investigation in 2015, former FIFA President Sepp Blatter resigned. In 2017, Julius Baer employee Jorge Luis Arzuaga pleaded guilty in federal court in New York to participating in a money laundering conspiracy in connection with the distribution and receipt of millions of dollars of bribes paid to FIFA officials.

The scandal involved officials and affiliates of FIFA and associated sports media and marketing companies. Philipp Rickenbacher was named the new CEO of Julius Baer in 2019, and he has worked to distance the bank from the FIFA scandal and other regulatory investigations.

Last month, Julius Baer said it would withhold approximately $5.5 million in deferred pay from two former CEOs who both led the bank during a number of scandals. It was first reported by the Financial Times that Julius Baer would withhold money from Boris Collardi, who was CEO from 2009 to 2017, and Bernhard Hodler, who was CEO from 2017 to 2019. 

Julius Baer has also been considering an expansion for its wealth management business in Latin America and the U.S. to boost its global presence in the midst of its regulatory battles. 

The bank wants to double its assets under management in Latin America within three to five years and start a wealth management business in the U.S. as soon as it clears its regulatory hurdles in connection to the FIFA scandal.