March 30, 2026

FinCEN Targets MBaer with Most Severe Section 311 Measure

Emily Friedman Ballard Spahr LLP + Follow Contact LinkedIn Facebook X Send Embed

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MBaer Merchant Bank AG (“MBaer”) was recently designated a “primary money laundering concern” by the U.S. Department of the Treasury’s Financing Crimes Enforcement Network (“FinCEN”) pursuant to Section 311 of the PATRIOT Act.

The Consequences

FinCen detailed its allegations against MBaer on February 26, 2026, in its Notice of Proposed Rulemaking (“NPRM”) where it proposed measures that, if implemented, would effectively ban MBaer from the U.S. financial system. Specifically, the measures would:

• Prevent U.S. financial institutions from opening or maintaining correspondent accounts for or on behalf of MBaer,
• Require U.S. financial institutions to take reasonable steps not to process transactions if the transactions that involve MBaer,
• Implement due diligence requirements that would guard against accounts being used to process MBaer transactions. This would require that a covered financial institution notify any foreign correspondent account that MBaer cannot use the correspondent account and take reasonable steps to identify any use of its foreign accounts by MBaer, and
• Require U.S. financial institutions to document compliance with the notifications requirement. FinCEN is acting under Section 311 of the PATRIOT Act, which grants the Treasury Secretary the authority to impose “special measures” against a foreign financial institution if the Secretary finds the institution is a “primary money laundering concern.”

FinCEN’s proposal, special measure five, represents the most restrictive action available under Section 311. When imposed, it can effectively bar a foreign financial institution from accessing the U.S. dollar and the broader U.S. financial system. For institutions that depend on these channels, the consequences can be significant. (See additional posts on FinCEN’s Section 311 actions linked here).

The Justification

FinCEN alleges this extreme measure is warranted here because MBaer has assisted with Venezuelan state-sponsored corruption; assisted with Russian and Iranian money laundering and has facilitated terrorist financing.

Indeed, FinCEN concluded that, “MBaer maintained a higher-risk customer base without implementing sufficiently mitigating controls that would prohibit such customers from engaging in illicit activities, and in some cases, deliberately acted to facilitate those illicit activities.” For example, a former MBaer Vice Chairperson of the Board was accused of using MBaer to “launder proceeds of Venezuelan corruption[.]” MBaer also attempted to conceal that it had retained Russian clients, despite Russia related sanctions. MBaer is also accused of providing access to the U.S. financial system for persons “providing material support to Iran-related money laundering and terrorist financing efforts, including support to Iranian foreign terrorist organizations[.]”

FinCEN believes the fifth special measure will:

• Close MBaer’s access to the U.S. financial system,
• Inhibit MBaer’s ability to act as an illicit finance facilitator, and
• Raise awareness of the ways illicit actors circumvent money laundering controls and international sanctions. FinCEN considered less extreme measures to impose against MBaer but concluded that anything other than a complete prohibition would be ineffective.

The Impact

FinCEN’s proposed prohibition against MBaer may signal a willingness by the Trump Administration to sanction financial institutions to protect its foreign policy interests. Foreign financial institutions should be aware of President Trump’s regulatory expectations if they want to maintain their ability to access and participate in the U.S. financial system and should be particularly wary of doing business with those that the U.S. deems to be adverse to its national security interests.

[View source.]

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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