Banque J. Safra Sarasin, a long-established Swiss private bank, has been sanctioned following a landmark ruling that underscores how compliance shortcomings can expose even well-known institutions to criminal liability. The case revolved around systemic failures to prevent aggravated money laundering tied to the international Lava Jato scandal, which involved corrupt payments linked to Brazil’s state-owned oil giant Petrobras.
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Money laundering at Banque Safra Sarasin
Between 2011 and 2014, accounts held with Banque Safra Sarasin were used to channel illicit funds through Switzerland’s financial system. Investigations revealed that the bank had failed to put in place adequate organisational safeguards to prevent the laundering of tens of millions of dollars. Regulators determined that these gaps facilitated the flow of criminal proceeds, damaging the integrity of the Swiss financial market and raising significant questions about how effectively global banks screen and monitor high-risk clients.
The ruling is significant because it applied corporate criminal liability under Swiss law. Authorities concluded that the bank’s deficient controls enabled aggravated money laundering, resulting in a fine of CHF 3.5 million. In addition, the bank reached a settlement with Petrobras, paying CHF 16 million, while most of the blocked funds were repatriated to Brazil.
The case is emblematic of the growing insistence by enforcement authorities that banks must not only identify and report suspicious activity, but also establish organisational resilience against financial crime. For financial institutions worldwide, this decision demonstrates how lapses in compliance frameworks can result in both reputational and financial devastation.
Criminal origin of funds and client networks
At the heart of the case was a former relationship manager whose client book contained individuals tied to the Lava Jato affair. These clients included senior executives of Petrobras as well as intermediaries from oil and construction companies seeking influence over contracts. Several accounts were opened under Banque Safra Sarasin to move and disguise corrupt payments. Funds flowed through Switzerland in ways designed to conceal their illicit origin, exploiting weaknesses in the bank’s risk-based controls.
The transactions highlighted classic money laundering typologies. Payments from companies were transferred to accounts linked to Petrobras officials and then redistributed through multiple layers of transfers. The complexity of these movements, often involving shell structures and correspondent banks, aimed to obscure the connection to bribery proceeds. Some transfers amounting to nearly USD 28.5 million were even rejected by recipient banks, showing that external red flags were raised, but this did not prevent Banque Safra Sarasin from executing other transactions.
This demonstrates how criminal networks adapt rapidly to compliance weaknesses within institutions. A well-resourced private bank with global reach should have been able to identify red flags such as disproportionate cash movements, opaque company structures, and clients tied to politically exposed persons. Instead, the reliance on trust between the relationship manager and her clients created vulnerabilities that enabled the laundering of approximately USD 42.5 million.
The fallout illustrates the importance of robust client onboarding, enhanced due diligence for high-risk accounts, and constant monitoring to detect patterns inconsistent with a client’s profile. Where compliance staff are poorly equipped or internal governance is fragmented, criminal activity can persist for years before being uncovered.
Corporate criminal liability and Swiss enforcement
Swiss authorities applied Article 102 of the Swiss Criminal Code, which allows a legal entity to be held liable if organisational deficiencies make it possible for criminal offences to occur within the company. The focus was not only on individual misconduct but also on systemic failings inside the bank.
The investigation revealed that internal disorganisation allowed aggravated money laundering to occur unchecked. Banque Safra Sarasin was found guilty of lacking sufficient preventive measures, which enabled corrupt payments to move through its accounts. The CHF 3.5 million fine, though modest compared to international penalties levied in other jurisdictions, represents a strong application of corporate criminal liability under Swiss law.
Authorities also imposed sanctions on an individual relationship manager who facilitated money laundering schemes while working for both Banque Safra Sarasin and another Swiss institution. She received a suspended custodial sentence of six months with probation. Her activities included deliberately obstructing the identification of assets derived from foreign bribery, amounting to USD 29.2 million.
The dual focus on both the institution and the individual sends a message that Swiss enforcement will scrutinize both organisational failings and personal accountability. For banks, this confirms that even when individuals depart, the organisation can remain liable for failing to control their activities while employed.
The case also shows the challenges authorities face in complex cross-border investigations. Seizure of email accounts and unsealing procedures delayed access to evidence by more than five years. Despite these hurdles, prosecutors managed to assemble sufficient proof to hold both the bank and its former staff accountable.
Lessons for compliance and global financial institutions
This case provides several important lessons for compliance officers, risk managers, and executives in financial institutions.
First, politically exposed persons continue to present heightened risks, particularly in industries such as oil and construction where large state contracts are involved. Enhanced due diligence is not optional but mandatory to prevent exposure to corruption-linked funds.
Second, organisational measures must extend beyond policies written on paper. They must be operationally enforced through technology, training, and independent oversight. The absence of clear responsibilities, poor information flow, or under-resourced compliance teams creates opportunities for illicit funds to bypass controls.
Third, financial institutions must ensure that monitoring systems evolve in real time. The Lava Jato scheme showed how criminal groups adapt to compliance barriers. Transaction monitoring should incorporate scenario-based testing, machine learning, and adverse media screening to identify suspicious activity even when clients attempt to camouflage illicit origins.
Fourth, reputational damage can exceed financial penalties. While Banque Safra Sarasin’s fine of CHF 3.5 million may seem limited compared to penalties in other jurisdictions, the long-term trust of clients, counterparties, and regulators has been undermined. For banks competing in the global wealth management industry, reputational resilience is as critical as financial capital.
Fifth, corporate criminal liability is now firmly embedded in Swiss enforcement practice. Institutions can no longer assume that responsibility will be limited to rogue employees. Organisational failings, even if unintentional, can trigger sanctions that undermine strategic objectives.
For compliance professionals, this case highlights the need to shift from a reactive posture to a proactive culture of financial crime prevention. Integrating compliance into business strategy, rather than treating it as an afterthought, is essential to surviving an increasingly unforgiving enforcement landscape.
Path ahead for Swiss banking sector
The Swiss banking sector has faced sustained scrutiny over the last decade, with multiple cases highlighting vulnerabilities in money laundering prevention. This case against Banque Safra Sarasin is part of a broader trend in which Swiss authorities aim to preserve the integrity of their financial centre by holding banks accountable for organisational failings.
The decision signals that regulators will no longer tolerate outdated or insufficient compliance practices, especially when linked to international scandals such as Lava Jato. The fact that most illicit funds were repatriated to Brazil shows the growing commitment to cross-border cooperation in financial crime enforcement.
For global banks, the message is clear. Compliance frameworks must be robust, adaptable, and deeply integrated into all business functions. Failure to prevent laundering risks no longer results in discreet settlements alone but also in criminal liability and public sanctions.
Going forward, institutions operating in Switzerland and abroad must view compliance not as a regulatory burden but as a core element of trust and sustainability. The future of financial services depends on the industry’s ability to anticipate and prevent financial crime at every level of its operations.
Related Links
- Swiss Criminal Code Article 102
- Swiss Criminal Code Article 305bis
- Swiss Financial Market Supervisory Authority FINMA
- Petrobras Lava Jato Case Overview – Brazilian Government
Other FinCrime Central Articles About Swiss Banks and the Lava Jato Scandal
Source: Swiss Government
Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.
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