U.S. Treasury Targets a Swiss Bank with PATRIOT Act “Section 311”
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) publication entered the Federal Register pipeline for a proposed rule that would effectively cut MBaer Merchant Bank AG (Switzerland) off from the U.S. financial system. The mechanism is not classic sanctions. It is Section 311 of the USA PATRIOT Act, used to designate an institution as a “primary money laundering concern” and impose “special measures.”
FinCEN’s proposal is blunt in its allegation: MBaer allegedly moved “over a hundred million dollars” through the U.S. financial system for illicit actors linked to Russia and Iran, and it describes conduct tied to money laundering, corruption, and terrorist financing. Source: Treasury’s public statement.
For fintech and payments leaders, the point is not the headline. The point is what the U.S. is signaling: dollar access is a compliance outcome, and correspondent networks can be weaponised through rulemaking even when a bank is outside U.S. jurisdiction.
Publish Date
3 Mar 2026
Reading Time
7 minutes
Category
Legal News
Jurisdiction
Switzerland
What FinCEN Proposed and Why Section 311 Is a Different Tool than Sanctions
FinCEN’s proposal is framed as Special Measure Five under Section 311. If finalised, it would prohibit covered U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, MBaer.
The Federal Register version also sets out additional operational obligations that matter for banks and payment rails:
- U.S. institutions must take reasonable steps not to process transactions in the United States for a foreign bank’s correspondent account if the transaction involves MBaer.
- U.S. institutions must apply special due diligence to foreign correspondent accounts to guard against their use to process transactions involving MBaer.
This design is important. It does not only “ban MBaer.” It pushes screening and enforcement pressure into the wider correspondent chain.
Operator insight: Section 311 actions create a “contagion control” model. Even non-U.S. institutions may be de-risked by counterparties that want to avoid U.S. exposure.
What the U.S. Alleged: Russia, Iran, and a Larger Illicit-Finance Narrative
Treasury’s public statement says MBaer “funneled over a hundred million dollars” through the U.S. financial system for illicit actors tied to Iran and Russia. It also alleges the bank and its staff enabled corruption linked to Russian money laundering and “money laundering and terrorist financing” on behalf of Iran-aligned actors, naming the Islamic Revolutionary Guard Corps (IRGC) and its Quds Force.
The FinCEN NPRM itself goes wider than the Russia-Iran framing in some parts. It also references processing tied to Venezuelan corruption and describes broader patterns of illicit activity, based on public and non-public information.
What we should not overstate: this is still a proposal at the U.S. level, not a final adjudication. FinCEN is using its rulemaking powers and inviting comment, but the allegations are presented as a basis for the finding and the special measure.
Timeline and Process: Proposed Rule, Public Comment, and the Practical Effect
FinCEN published the notice of proposed rulemaking on 26 February 2026, and the Federal Register docket shows a comment due date of 1 April 2026.
This matters for two reasons:
- It gives counterparties a window to react before any final rule is issued. In practice, many institutions treat a Section 311 proposal as enough to begin de-risking.
- It signals that the U.S. is willing to use rulemaking to pressure a bank’s U.S. connectivity even without immediate OFAC blocking sanctions.
Operator insight: once a bank is framed publicly as a “primary money laundering concern,” the commercial damage can precede the formal legal endpoint.
Switzerland’s Parallel Track: FINMA Liquidation and the Local Prudential Reality
Swiss media and reporting indicate FINMA moved to wind down the bank following U.S. action. Reuters reports FINMA cited serious AML control weaknesses, a high proportion of high-risk relationships, and transactions involving sanctioned parties, and that the bank entered liquidation with appointed liquidators.
MBaer’s own website states FINMA revoked the bank’s licence by decision dated 6 February 2026 and ordered liquidation, with liquidators appointed from Kellerhals Carrard.
For readers, the combined message is clear: this is not only an American compliance story. It is also a Swiss supervisory and risk governance story, with real consequences for the institution’s continuity
What This Means for PSPs, EMIs, Crypto Firms, and Compliance Teams
Most fintech operators do not run correspondent accounts. But many depend on institutions that do. The MBaer case highlights four practical risk themes.
1) Dollar access is a chain risk, not a feature
If your settlement model touches USD rails, you inherit U.S. expectations indirectly. A Section 311 action can force counterparties to cut ties fast to protect their own U.S. access.
2) “High-risk client bases” create structural fragility
A bank’s risk profile can become non-bankable even if the institution is “small.” FinCEN’s framing focuses on the bank as an “access node” for illicit actors, not on its balance sheet size.
3) Sanctions and AML are operational, not legal checklists
The allegations center on enabling activity linked to sanctioned actors and illicit finance. In 2026, regulators increasingly test whether controls are used, not merely written.
4) Expect more use of rulemaking tools against foreign institutions
This is not unique in U.S. history, but it is a reminder that the U.S. can move through FinCEN and the Federal Register to shape market behavior globally.
Practical Checklist: What to Review in Your Own Stack
If you are a PSP, EMI, crypto firm, or a platform that depends on banking rails, we would sanity-check:
- Counterparty exposure: where do you rely on USD clearing, correspondent chains, or nested relationships?
- Screening coverage: do your controls capture indirect counterparties and beneficiaries, not only direct clients?
- High-risk segmentation: are your controls and escalation thresholds credible for higher-risk geographies and sectors?
- Exit readiness: if a banking partner is suddenly de-risked, do you have an operational fallback?
Closing: The Compliance Lesson from the MBaer Case
The U.S. action against MBaer is a reminder that regulatory tools can change access overnight. For serious operators, resilience means building compliance, risk controls, and partner governance that can survive sudden re-pricing of “correspondent risk.”
Legasset can help assess exposure to U.S. correspondent dependencies, sanctions risk, and AML governance across banking and payment partners, including escalation and exit planning.
FAQ: FinCEN Section 311 and Cutting Off Banks from the Dollar System
What is a FinCEN “Section 311” action?
It is a PATRIOT Act mechanism allowing FinCEN to identify a foreign institution as a “primary money laundering concern” and impose special measures, including correspondent-account prohibitions.
Is this the same as OFAC sanctions?
No. OFAC blocking sanctions freeze property and prohibit dealings with listed persons. Section 311 is a separate AML tool focused on correspondent banking restrictions and due diligence obligations.
What did FinCEN propose against MBaer Merchant Bank AG?
A proposed rule to prohibit U.S. institutions from opening or maintaining correspondent accounts for MBaer and to add controls to prevent processing transactions involving MBaer through foreign correspondent accounts.
What is the public timeline for comments?
The Federal Register docket shows comments due 1 April 2026.
Why does this matter to fintechs that do not use correspondent banking directly?
Because most fintech settlement and card/payment rails depend on banks that do. De-risking can affect access, pricing, and continuity.
