Swiss Prosecutors Fine Pictet Bank CHF 2 Million Over Lava Jato Money Laundering Scandal

In a case that continues to reverberate through the corridors of global private banking, Swiss prosecutors have handed down a CHF 2 million fine to Banque Pictet et Cie SA (Pictet Bank) and issued a suspended sentence to a former senior banker for their roles in aggravated money laundering tied to Brazil’s colossal Lava Jato corruption probe.

The decision by the Office of the Attorney General of Switzerland underscores both the growing reach of international anti-corruption enforcement and the increasing accountability of financial institutions for failures in their anti-money laundering (AML) frameworks.

Money Laundering and Petrobras: The Mechanics of the Swiss Case

Between June 2010 and May 2013, more than USD 4.1 million in corrupt payments were channeled through Pictet Bank accounts, originating from bribes connected to Brazilian oil giant Petrobras. According to Swiss authorities, the illicit funds were routed via offshore companies controlled by a Petrobras employee, and “the transfers were intended to conceal the criminal origin of the money.”

The individual at the center of the case, a former senior relationship manager at Pictet’s Wealth Management division who later oversaw the Brazilian market, personally facilitated 54 questionable transfers. The transactions were processed through an offshore account held at Pictet Bank, whose beneficial owner was the Petrobras official in question.

Investigators traced the origins of these funds to a bribery scheme orchestrated by an intermediary working for Dutch oil services firm SBM Offshore. The bribes were linked to inflated Petrobras contracts, forming part of a broader pattern of corruption that erupted into Brazil’s largest-ever graft scandal.

“The aim was to conceal the origin and beneficial ownership of the funds,” stated the summary penalty order. Prosecutors relied on Article 305bis paragraphs 1 and 2 of the Swiss Criminal Code, which define and penalize aggravated money laundering, citing both the scale of the funds and the length of the scheme.

Pictet Bank Found Liable Under Swiss Corporate Criminal Law

While the relationship manager was sentenced to a six-month suspended custodial term, Swiss authorities did not stop at individual accountability. The bank itself was also held criminally liable for what prosecutors described as “serious organizational deficiencies.” These failures, they argued, enabled the illicit flow of funds without triggering appropriate compliance responses.

“Compliance staff failed to identify the high-risk nature of the client,” the Attorney General’s office noted, adding that enhanced due diligence should have been triggered, especially given the involvement of a politically exposed person (PEP) and complex ownership structures. Despite dozens of high-value transactions, no alerts were raised, and no reports were filed.

Under Article 102 paragraph 2 of the Swiss Criminal Code, companies can be held liable when a lack of proper organization allows crimes such as aggravated money laundering to occur. In this case, the regulator concluded that Pictet’s AML program at the time failed to prevent or detect the misconduct.

Though prosecutors acknowledged “mitigating circumstances”—including Pictet Bank’s full cooperation during the investigation and the institution’s subsequent reforms—they imposed a fine of CHF 2 million. This figure, while modest in the context of the bank’s global operations, sends a clear message about the risks of AML noncompliance.

Fallout from Lava Jato: A Swiss Angle on a Brazilian Scandal

Operation Lava Jato began as a domestic corruption probe in Brazil but quickly expanded into one of the largest transnational investigations into political and corporate bribery.

Petrobras sat at the center of the scheme, with billions in bribes paid by companies seeking to secure overpriced government contracts.

As Swiss investigators followed the money trail, they found that the Alpine nation’s banking system had been used to shelter, move, and disguise corrupt proceeds. More than 40 legal proceedings in Switzerland have stemmed from Lava Jato, with Pictet’s case serving as one of the most prominent examples of institutional exposure.

“Without robust AML controls and an acute awareness of the risks associated with politically exposed persons (PEPs), banks unwittingly became part of the problem,” the Attorney General’s office noted, adding that “financial institutions must learn to better recognize and mitigate cross-border corruption risk.”

Legal Framework: The Case Law Behind the Convictions

The former Pictet banker’s conviction was based on Article 305bis of the Swiss Criminal Code, which criminalizes both basic and aggravated money laundering. The case also referenced Article 102, which enshrines corporate liability in Swiss law when criminal acts are made possible by systemic organizational failures.

Although prosecutors initially explored the possibility of charging both the bank and the banker with direct involvement in foreign bribery under Article 322septies, they ultimately dropped those charges “due to lack of sufficient evidence,” in accordance with Article 319 paragraph 1 letter b of the Swiss Criminal Procedure Code.

This outcome highlights an important legal nuance: while the laundering of bribery proceeds was established beyond doubt, direct complicity in the act of bribery itself could not be conclusively proven. Nevertheless, the laundering of those proceeds was sufficient to trigger criminal sanctions.

Remediation and Moving Forward: Pictet’s Institutional Response

Following the investigation, Pictet Bank undertook sweeping compliance reforms. These included “restructuring its risk management and compliance operations, implementing new due diligence protocols, and investing in extensive staff training,” according to internal sources.

Prosecutors noted the bank’s cooperation throughout the proceedings, as well as the decision by both the institution and the individual banker not to contest the summary penalty order. This acceptance of responsibility was seen as a sign of good faith and contributed to a more lenient sentence.

Still, the case has inflicted reputational damage on one of Switzerland’s most respected private banks. It stands as a potent example of how institutional prestige offers no immunity from the consequences of compliance lapses.

Conclusion: A Cautionary Tale for Private Banks Worldwide

The conviction of Banque Pictet et Cie SA and its former relationship manager sends a powerful signal to the global financial industry: regulatory enforcement is evolving, and the cost of failure is rising. This case illustrates how insufficient risk monitoring, poor due diligence, and systemic oversight failures can make even elite banks vulnerable to criminal liability.

“Effective AML compliance is no longer just a regulatory requirement but a strategic imperative,” Swiss prosecutors emphasized. In a world of increasingly sophisticated criminal networks and growing international cooperation among regulators, banks must take greater responsibility for their role in safeguarding the financial system.

As private banks navigate the complexities of global wealth management, this case serves as a sobering reminder that rigorous compliance, ethical culture, and organizational integrity are not just ideals—they are legal necessities. 

By fLEXI tEAM