The restrictions on Gazprombank (Switzerland) include the strict supervision of existing clients and a ban on accepting new private clients.
The action taken by Finma (Financial Market Supervisory Authority) against the bank follows a two-year probe of 30 Swiss institutions linked to the Panama Papers and is the country’s only enforcement action directly related to the leak.
Globally, the Panama Papers have ended careers, with the prime minister of Iceland losing his job, and damaged reputations after the leak from Panama-based law firm Mossack Fonseca revealed a network of tax avoidance measures of the rich and powerful.
Finma said the paper trail revealed “serious shortcomings in anti-money laundering processes regarding private clients and politically exposed persons using offshore companies at Gazprombank” from 2006 to 2016.
“The bank failed to carry out adequate economic background clarifications into business relationships and transactions with increased money laundering risks.”
In many cases, Gazprombank’s risk categorisation of its business relationships was found to be incorrect or was carried out too late, Finma said.
“It failed to clarify the background of business relationships and transactions with the necessary depth and attention to detail. The bank also failed to keep appropriate records of the transactions and relationships, and frequently did not validate the documentation it obtained.
“The bank also failed in some instances to report suspicious business relationships to the Money Laundering Reporting Office Switzerland (MROS) within an appropriate time frame. The bank’s organisation and risk management and control functions have therefore shown serious shortcomings in the prevention of money laundering.”
As a result of the Panama Papers leak, Finma has carried out in-depth investigations with 20 Swiss banks, some of which were asked to improve their processes.
The conclusion of Finma’s proceedings against Gazprombank Switzerland also marks the conclusion of Finma’s activities linked with the Panama Papers.
AML: a key priority
In a statement, a spokesman said anti-money laundering was a key priority for Finma.
Finma has issued, on average, more than 10 enforcement rulings a year imposing sanctions relating to money laundering and has taken a range of measures, including the dissolution of a bank, a licence withdrawal from a fiduciary company and the disgorgement of illegally generated profits.
Finma has also enforced changes to governance structures at supervised institutions and set limits on certain new business activities.
The Swiss regulator issued industry bans against eight bank managers following serious breaches of due diligence requirements between 2016 and 2017 and launched enforcement proceedings against seven bank managers.