Lead: On February 26, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published a notice of proposed rulemaking that would, if finalized, cut MBaer Merchant Bank AG off from the U.S. financial system. The proposal invokes section 311 of the USA PATRIOT Act to designate MBaer a primary money laundering concern and proposes special measure five — barring covered U.S. banks from opening or maintaining correspondent accounts for MBaer. Treasury officials allege MBaer routed more than $100 million through the U.S. system on behalf of illicit actors tied to Russia and Iran, including entities aligned with the Islamic Revolutionary Guard Corps and its Quds Force. The NPRM opens a 30-day public comment window after Federal Register publication.
Key Takeaways
- FinCEN published a notice of proposed rulemaking on February 26, 2026, seeking to apply section 311 of the USA PATRIOT Act to MBaer Merchant Bank AG.
- The proposed action is to impose special measure five, which would prohibit covered U.S. financial institutions from opening or maintaining correspondent accounts for MBaer.
- Treasury alleges MBaer “funneled over a hundred million dollars” through the U.S. financial system on behalf of illicit actors connected to Russia and Iran.
- Officials link MBaer to money laundering, corruption tied to Russian networks, and financing for Iran-aligned terrorist actors, including the IRGC and Quds Force.
- The NPRM begins a comment period: written feedback must be submitted within 30 days of its Federal Register posting.
- FinCEN highlights its whistleblower incentive program; actionable tips that lead to enforcement may be eligible for awards.
Background
Section 311 of the USA PATRIOT Act authorizes FinCEN to identify foreign financial institutions as ‘‘primary money laundering concerns’’ and to require U.S. banks to take ‘‘special measures’’ ranging from recordkeeping to limiting correspondent banking relationships. Special measure five is among the strongest tools available: it effectively excludes a foreign bank from dollar-denominated correspondent services provided by U.S. institutions. The authority is intended to protect the integrity of the U.S. financial system by cutting off convenient access to dollar clearing for actors who abuse it.
Historically, the designation mechanism has been used selectively against institutions that FinCEN judges central to laundering or sanction-evasion networks. The agency balances law enforcement and national-security evidence with potential secondary effects on legitimate commerce and correspondent-banking chains. Switzerland’s banking sector, a critical intermediary for global dollar flows, has faced heightened scrutiny in recent years as regulators and enforcement agencies focus on enforcement of anti-money-laundering (AML) rules and sanctions compliance.
Main Event
FinCEN’s February 26, 2026 NPRM finds ‘‘reasonable grounds’’ to conclude MBaer is of primary money laundering concern and proposes applying special measure five. If finalized, the rule would bar covered U.S. financial institutions from opening or maintaining correspondent accounts for or on behalf of MBaer — a step that would sharply curtail MBaer’s access to dollar clearing and many correspondent services.
The Treasury alleges MBaer and certain employees enabled money laundering and illicit finance, facilitating corruption tied to Russian money laundering networks and terrorist financing for Iran-aligned organizations including the Islamic Revolutionary Guard Corps and its Quds Force. The agency states MBaer acted as a critical access node to U.S. dollars for diverse illicit actors, thereby posing national-security and financial-integrity risks.
The NPRM is open for a 30-day written comment period following its entry in the Federal Register, giving banks, industry groups, foreign authorities and other stakeholders an opportunity to respond before any final rule. The proposal also reiterates the availability of FinCEN’s whistleblower program for those with actionable information related to Bank Secrecy Act violations and certain sanctions and national-security laws.
Analysis & Implications
Designating a foreign bank under section 311 and imposing special measure five has immediate operational effects: many U.S. dollar flows rely on correspondent banking relationships, and U.S. banks generally avoid maintaining accounts for entities that would expose them to regulatory or reputational risk. If finalized, MBaer would likely face severe constraints on dollar transactions, higher compliance burdens from correspondent banks, and potential loss of correspondent relationships through second- and third-order contagion.
For Swiss and international banks, the action signals continued U.S. willingness to use extraterritorial tools to address perceived threats to dollar integrity. That may prompt accelerated AML and sanctions remediation across correspondent networks, increased due diligence for Swiss intermediaries, and closer cooperation — or friction — between U.S. and Swiss authorities depending on information-sharing and legal processes.
Economic consequences for MBaer would be direct and substantial: restricted dollar access typically raises transaction costs, forces reliance on non-dollar currencies or local clearing partners, and can accelerate client flight. Broader market effects could include tighter correspondent-lending terms and higher compliance costs for banks that maintain exposure to jurisdictions or entities identified as risky by U.S. authorities.
Politically, the move could increase diplomatic pressure on Switzerland to demonstrate stronger AML and sanctions enforcement, even as Swiss regulators weigh legal protections for banks and banking secrecy regimes. The measure also communicates to other non-U.S. institutions that facilitation of sanction-evasion or terrorist financing can result in exclusion from critical dollar plumbing.
Comparison & Data
| Proposed Action | Immediate Effect |
|---|---|
| Special measure five under section 311 | Prohibits covered U.S. financial institutions from opening/maintaining correspondent accounts for MBaer |
| Alleged funds routed | More than $100 million through the U.S. financial system tied to illicit actors |
The table above summarizes the NPRM’s practical and numerical claims. The dollar figure cited by Treasury frames the scale of flows FinCEN attributes to MBaer; however, the NPRM is the beginning of an administrative process that invites comment and potential challenges before any final measure is imposed.
Reactions & Quotes
“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.”
Scott Bessent, Secretary of the Treasury (official statement)
“If finalized, the proposed rule would prohibit covered U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, MBaer.”
Financial Crimes Enforcement Network (FinCEN) / U.S. Department of the Treasury (NPRM)
“Individuals who provide actionable information may be eligible for awards if their tip leads to a successful enforcement action.”
FinCEN Whistleblower Program (official guidance)
Unconfirmed
- MBaer’s full public response to the NPRM had not been posted in the Treasury release; the bank’s rebuttal or internal measures remain unconfirmed.
- The specific client identities and transactional chains underlying the ‘‘over a hundred million dollars’’ allegation are summarized in the NPRM but have not been independently disclosed in full in the Treasury press release.
- Potential responses by Swiss regulators or immediate countermeasures by MBaer’s correspondent partners have not been publicly reported at the time of this release.
Bottom Line
The Treasury’s proposed use of section 311 against MBaer marks a significant enforcement escalation aimed at denying a foreign bank access to U.S. dollar plumbing. If finalized, special measure five would sharply curtail MBaer’s ability to process dollar transactions and could prompt broader compliance and diplomatic reverberations, particularly in Switzerland and among correspondent banks worldwide.
Stakeholders — including banks, industry groups and foreign authorities — have a 30-day window after the NPRM’s Federal Register publication to submit comments. The outcome will depend on administrative review, any supplemental information provided by MBaer or third parties, and potential legal challenges; meanwhile, FinCEN is encouraging whistleblower tips that could affect the agency’s enforcement decisions.