Specifically, JBI fabricated a finder’s arrangement between BJB and Dimitri Merinson, an employee of several Yukos Group companies. Merinson received a finder’s fee from BJB for introducing Yukos Group to Julius Baer. The understanding between the two companies was that the Yukos Group would place a large amount of cash with Julius Baer, thus pushing the revenue of the bank higher.
The FCA further highlighted that Merinson and Julius Baer shared profits from uncommercial FX transactions. In fact, Merinson received about $3 million from these illegal arrangements.
Additionally, JBI did not have adequate policies and procedures for identifying and managing the risks from relationships between JBI and finders, which brings potential clients. Though the bank introduced some policies after June 2010, they were inadequate.
Concealed from the Regulator
JBI, an investment advisory and wealth management firm, discovered the illicit nature of the transactions in 2012 and suspected the possibility of fraud. However, the company only reported the activities to the FCA in July 2014.
“There were obvious signs that the relationships here were corrupt, which senior individuals saw and ignored. These weaknesses create the circumstances in which financial crime of the most serious kind can flourish,” said Mark Steward, the Executive Director of Enforcement and Market Oversight at the FCA.
The bank received a discount on the original penalty of more than £24 million as it agreed to settle with the regulator at an early stage.
Apart from the penalty, the British market watchdog banned Gustavo Raitzin, the former Regional Head for Bank Julius Baer (BJB); Thomas Seiler, the former BJB Sub-Regional (Market) Head for Russia and Eastern Europe and JBI non-executive director; and Louise Whitestone, the former relationship manager of the bank’s Russian and Eastern European Desk. They are accused of being involved in failures by the investment bank.
The regulatory actions among the individuals are now pending review by the Upper Tribunal.
Earlier this year, the FCA imposed similar hefty fines on other financial institutions, including Ghana International Bank, Gatehouse Bank, Barclays, and a few more.
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