FINMA’s Julius Baer findings: an endorsement is not evidence

The brief

In its 29 September announcement, FINMA reported serious risk-management and anti-money-laundering failings at Julius Baer. One finding concerned a client-policy exception based on an employee’s endorsement, which was not adequately questioned in subsequent reviews. The ruling was not yet legally binding at the announcement date.

Our take is to make an exception a reviewable decision with supporting evidence, an independent approver, an expiry or review date and clear conditions for reconsideration. A file should explain what remains unresolved and why someone accepted the risk. Retaining a recommendation or a signed approval is only part of that record; later reviewers need to see whether its factual basis still holds.

The full record

A personal assurance can be recorded accurately and still be a weak basis for a decision. FINMA’s 29 September enforcement announcement concerning Julius Baer illustrates why the reason for a client-risk exception needs scrutiny alongside its approval.

The relevant finding and its status

FINMA said the bank had inadequately examined asset origins in relationships linked to two Russian politically exposed persons. It described an exception supported by an employee’s endorsement and insufficient challenge during later reviews, despite that employee’s close ties to a client’s family. The regulator also acknowledged remedial measures and said the current management team had been appointed after the events concerned. Its announcement states that the ruling was not yet legally binding. Source: FINMA’s findings and measures.

Our analysis: distinguish assurance from supporting facts

An introduction, endorsement or long relationship can explain why a client reached an institution. It does not, by itself, establish where assets came from or resolve contradictory information. In the working record, identify which statements are documentary evidence, which are client explanations and which are another person’s opinion.

An exception should state the ordinary requirement being departed from, the reason, the remaining uncertainty and who has authority to approve it. Keep the evidence and any contrary information attached to that decision. If the approver relies on another person’s judgement, record the basis for that reliance and any relationship that could affect independence.

Make later review a fresh decision

Set a review trigger that asks whether the facts still support the exception. A periodic tick confirming that an earlier approval exists does not answer that question. Record new information, the reviewer’s assessment and whether the exception continues, changes or ends.

Where an unresolved issue passes between a relationship team, compliance and management, preserve the question and each response. That helps prevent an incomplete answer from becoming accepted simply because it has appeared in several documents.

A practical internal exercise

Use a fictional client file containing a trusted introduction, incomplete evidence and a later conflicting fact. Ask an authorised reviewer to identify the gap, locate the exception’s owner and explain the next decision required. Measure whether the record makes that possible without relying on the original relationship manager’s memory.

This is an editorial proposal for testing record quality. It is not a claim that software would have prevented the breaches or that FINMA requires this particular format. Our analysis of cross-border information requests applies the same discipline to the purpose and approval of disclosures.

This article reports the regulator’s public statement, not the full underlying decision. The legal status is described as at that announcement. We have not assessed individual responsibility or audited the bank. The proposed review record and exercise are editorial analysis.

1. FINMA enforcement announcement, 29 September 2026