Swiss Regulator Finds Gaps in Banks’ Money Laundering Risk Analysis.

Switzerland’s financial regulator FINMA has found that while banks and other financial institutions have strengthened their anti-money laundering (AML) measures, significant weaknesses remain in how they assess and manage risk.

In a report published on Thursday, FINMA stated that Swiss banks, asset managers, and other financial institutions are still not consistently applying robust risk analysis frameworks. The regulator emphasized that institutions must make better use of existing tools to identify and monitor high-risk financial activity.

Following a review process launched after investigations in 2023, FINMA examined the risk assessments of more than 30 banks and conducted additional supervisory checks across the financial sector. The findings revealed recurring shortcomings in how risks are recorded and evaluated.

According to FINMA, some institutions failed to document risks in sufficient detail, while internal control exceptions were applied too broadly. In addition, warning indicators designed to detect suspicious activity were often too weak or not clearly defined, increasing the chance that problematic client relationships could go unnoticed.

The regulator highlighted particular concerns around politically exposed persons (PEPs), complex corporate structures, and the growing use of crypto-related financial services. These areas, FINMA warned, require enhanced scrutiny due to their higher exposure to money laundering risks.

Although Switzerland’s financial sector has made progress in strengthening compliance systems, FINMA stressed that further improvements are necessary to ensure effective risk detection and prevention. The authority called on institutions to tighten internal controls and improve the quality of their monitoring processes.

The report reinforces Switzerland’s ongoing efforts to maintain the integrity of its banking system while adapting to increasingly complex global financial risks.

UBS Cleared in Archegos Case

The United States Federal Reserve has officially lifted the enforcement measures imposed against UBS and the former Credit Suisse over the collapse of the Archegos hedge fund scandal.

According to the Federal Reserve, the restrictions introduced in 2023 were related to serious organisational and risk-management failures discovered within Credit Suisse during the collapse of Archegos Capital Management in 2021. The incident became one of the biggest financial disasters in the bank’s history.

In 2023, the Federal Reserve fined Credit Suisse and UBS a combined $268.5 million after identifying weaknesses in supervision, liquidity management, internal controls, and data management systems. Regulators also demanded major improvements to the banks’ compliance and oversight structures.

The enforcement action was coordinated with international financial regulators. Britain’s Prudential Regulation Authority imposed an additional £87 million fine, while Switzerland’s financial regulator FINMA ordered corrective measures after uncovering serious operational failures within Credit Suisse.

The collapse of Archegos Capital Management in March 2021 had a devastating impact on several international financial institutions. However, Credit Suisse suffered the largest losses among all affected banks. The scandal reportedly cost the Swiss bank nearly CHF5 billion and severely damaged investor confidence.

Archegos was managed by investor Bill Hwang, whose highly leveraged investment strategy triggered massive losses across global markets after the hedge fund collapsed.

Financial analysts widely view the Archegos crisis as one of the key events that accelerated the downfall of Credit Suisse before its emergency takeover by UBS in 2023. Since then, UBS has continued integrating Credit Suisse operations while working closely with global regulators to strengthen compliance systems.

The Federal Reserve’s decision to remove the measures suggests regulators are satisfied with the corrective actions taken by UBS following the acquisition and restructuring process.