Trump Administration seeks to isolate a Swiss bank from the U.S. financial system over ties to Russia, Iran

The Treasury Department announced Thursday that it is seeking to isolate Swiss bank MBaer Merchant Bank AG from the U.S. financial system, pointing to alleged ties of the Swiss institution to sanctioned figures linked to the regimes in Iran and Russia. Federal officials allege that MBaer and some of its employees facilitated corrupt financial flows connected to Russian money laundering schemes and helped process transactions linked to Iran's Islamic Revolutionary Guard Corps and its Quds Force, which allegedly included various terrorist financing-related activities.

As part of the action, the Treasury proposed some modifications to the Financial Crimes Enforcement Network (FinCEN) rules that would prevent covered U.S. financial institutions from opening or maintaining correspondent or pass-through accounts for the bank. "MBaer has funneled over a hundred million dollars through the U.S. financial system on behalf of illicit actors tied to Iran and Russia. Banks should be on notice that the U.S. Treasury will aggressively protect the integrity of the U.S. financial system using the full force of our authorities," Treasury Secretary Scott Bessent said in a statement.

Bank failed to comply with anti-money laundering obligations

In addition to these actions, there have also been developments in Switzerland, with several local media outlets detailing that the country's Financial Market Supervisory Authority (FINMA) recently concluded an enforcement proceeding related to MBaer. The regulator found that the bank failed to comply with anti-money laundering obligations and failed to meet risk management standards, particularly with regard to sanctions compliance. If adopted, the provision would represent the most severe sanction available short of a total block, de facto restricting the bank's ability to transact in U.S. dollars.

The move comes as the administration of President Donald Trump has expanded its sanctions campaign against Tehran and Moscow, targeting those sectors that U.S. officials say generate revenue used to sustain military operations and other prohibited activities.

On Wednesday, the Treasury announced additional sanctions against Iranian individuals, companies and vessels allegedly involved in illicit oil sales and the country's ballistic missile program. These actions were unveiled a day before indirect talks on Iran's nuclear program resumed in Geneva, amid increased U.S. military deployment in the region and warnings that the use of force could be considered if diplomatic efforts fail.