It is a resounding defeat for the Swiss Financial Market Supervisory Authority (Finma): In a judgment dated June 16, 2026 (B-5862/2024, published July 1), the Federal Administrative Court in St. Gallen set aside all substantive orders of an enforcement ruling issued on June 21, 2024.

The identity of the prevailing bank emerges from the operative part of the judgment, including the rubrum, which was publicly displayed at the court for 30 days and which finews inspected at the seat of the Federal Administrative Court. 

Bank Wanted to Remain Anonymous

In the proceedings, the bank had requested that all identifying details – including its status as appellant in the case – be fully anonymized. The court rejected this for the public display of the rubrum because no substantiated reasons had been put forward, pointing to the principle of the public pronouncement of judgments.

This makes it clear: Finma's opposing party is VP Bank (Switzerland), headquartered in Zurich, a subsidiary of Liechtenstein's SIX-listed VP Bank in Vaduz. Contacted by finews, the media office of VP Bank in Vaduz confirms that the institution took part in the proceedings as appellant.

The bank was represented by Flavio Romerio of Homburger, one of the country's most prominent financial market lawyers.

After Finma issued its enforcement ruling on June 21, 2024, Romerio approached the St. Gallen court twice: On July 15, he filed a complaint for denial of justice against Finma (we return to this at the end of this article), and on September 16, he challenged the ruling on the merits by way of appeal. 

Disgorgement, Russia Ban, Proper Conduct

In its enforcement ruling, Finma had accused the bank of serious violations of anti-money-laundering due diligence obligations and confiscated 440,117 Swiss francs (around $545,000) in profits allegedly generated as a result.

In addition, it imposed an open-ended ban on entering into new business relationships with politically exposed persons of Russian nationality or Russian domicile, as well as with commercial clients of Russian domicile or nationality with a material nexus to Russia or Belarus – along with reporting obligations and the appointment of an audit agent.

More still: Finma even played the «Gewähr» card, invoking the guarantee of irreproachable business conduct. According to the judgment, its accusations included that the bank had violated its duty to report to the supervisor itself – which, in Finma's view, was relevant to that guarantee. No label carries more weight in Swiss supervisory law. None of it survived in court.

«Inadmissible Hindsight Bias»

The considerations of Judge Eva Schneeberger and her chamber read like a reckoning with the supervisor's enforcement craft. Their core finding: Finma imputed to VP Bank (Switzerland) a level of knowledge it could not possibly have had at the relevant time. «The appellant rightly objects that the lower instance commits a hindsight error in its reasoning,» the judgment states.

The term refers to the cognitive distortion of «believing in hindsight that one could or should have foreseen an event».

Hindsight of what? To understand that, one has to know which clients were involved in the first place. The fully anonymized judgment does not answer this question directly. It does, however, reference a press release by the US Treasury Department (specifically its Office of Foreign Assets Control, OFAC) dated March 31, 2022.

OFAC Intervention

From a passage of that OFAC release, which the judgment renders into German almost word for word, the background can be inferred nearly beyond doubt: the March 31, 2022, strike by the US agency OFAC against Moscow's Serniya network.

The person described in the judgment as the bank client's wife would accordingly be Evgeniya Bernova, who was placed on the US sanctions list that day; the Maltese company mentioned in the judgment would be her firm Malberg Ltd, and the Moscow film company would be Sernia-Film Co Ltd.

Dual-Use Goods for the Russian Government

According to the OFAC designation and a subsequent indictment returned by a federal grand jury in the Eastern District of New York in December 2022 (case number 22-cr-409), the network around the Moscow-based companies Serniya Engineering and Sertal procured Western dual-use technology – technology that can serve both civilian and military purposes – on behalf of Russian intelligence services, among them the FSB and SVR, as well as state end users.

The central client of VP Bank (Switzerland) would accordingly have been the man who died in 2020 and is recorded in the bank documents cited in the judgment as Bernova's husband. He was a key figure in the Sernia group of companies, with offshoots in the UK and Germany, among other places: Victor Grigoryan, born in 1958.

British and German commercial register documents available to finews identify him as director and majority shareholder of Sernia UK Limited and as managing director of Munich-based Sernia GmbH – the latter a company he had run since its founding in 1998.

A Balance Sheet as a Fingerprint

Another detail makes the identification of Grigoryan as the client relationship at the center of the case practically beyond doubt: The judgment quotes the German group company's total assets at the end of 2018 from the bank files as «EUR 1.67 million». The annual accounts of Sernia GmbH filed in the German company register show exactly 1,671,411 euros as of December 31, 2018.

Evgeniya Bernova remains on the US sanctions list to this day; she was, however, not a subject of the US criminal indictment that followed the OFAC designation, which concerns another branch of the network that procured via the United States.

KGB Technician in Soviet Times

That American indictment shows no points of contact with Grigoryan or Bernova. The bank clients in question are not identical with any of the individuals charged in the US; their proximity to the network stems from the sanctions designation, not from a criminal indictment or conviction. Grigoryan himself was never sanctioned.

According to the bank documents cited in the St. Gallen judgment, Grigoryan worked as a technician for the Soviet intelligence service KGB before the collapse of communism. He then worked for the news agency Tass and later imported measuring, medical, and film technology into Russia.

Whether bank client Grigoryan was the architect, an enabler, or simply the deceased founder of a structure that was misused – neither the court judgment nor the US indictment provides an answer.

A Client of the Bank Since 2009

What did the bank know – and when? The chronology as documented in the judgment is the true heart of the case.

Grigoryan's accounts at VP Bank (Switzerland) existed from January 2009 – before that, he was already a client of the parent bank in Vaduz. The US indictment dates the procurement scheme to «since at least 2017»; by then, the Swiss banking relationship had already existed for eight years. It was closed a few weeks after Grigoryan's death, in June 2020 – nearly two years before the US even sanctioned the network. Individual related relationships, however, including that of his wife, who had been taken on as a client in 2016, continued to run.

A Visit From the Cantonal Police

What happened next is remarkable: In August and October 2020, the cantonal police contacted bank employees and invited them to meetings with the Federal Intelligence Service (FIS), which had taken an interest in the client.

The bank then carried out its own investigations, came across older critical media reports – and on January 11, 2021, based on its right to report, filed an initial report with the Money Laundering Reporting Office Switzerland (MROS) concerning four business relationships that had already been closed.

From June 2021, the bank moreover overhauled its defenses on its own initiative and issued new group-wide standards – around a year before the enforcement proceedings were even opened.

Then Came OFAC

Things only got moving with the US sanctions authority: On March 31, 2022, OFAC sanctioned Bernova. The bank placed the affected relationships under a comprehensive transaction freeze from April 1, 2022, and on May 5, 2022 – now based on its duty to report – reported 12 business relationships to MROS. On May 17, 2022, Finma opened its enforcement proceedings.

Asked whether the US sanctions triggered the proceedings, Finma declined to comment, citing the ongoing case.

It is against this sequence of events that the Federal Administrative Court measures the supervisor's conduct – and arrives at a highly critical verdict.

Finma Went «Manifestly Too Far»

The court expressly holds that, on the basis of what was known at the time, the bank could not have recognized the network's background as alleged by OFAC. The clients' explanations were plausible; according to the judgment, there were no concrete indications of illegal business before the US sanctions.

Nor does the court leave much else standing: Some of Finma's assertions remained «neither substantiated nor proven», it failed to establish the causal link between the alleged breaches of duty and the confiscated profit, and with its requirements for the clarification of ordinary transactions it went «manifestly too far». The accusation regarding the guarantee of irreproachable business conduct, finally, rested on an «unproven assertion of fact» and was «not sufficiently reasoned in law».

A Single Disputed Transaction

How narrow the basis for the disgorgement was is illustrated by one figure from the judgment: The investigating agent appointed by Finma examined a sample of 50 transactions from the business relationships in question. Only four of them fell within the non-time-barred period from June 2017 onward – and three of those four she herself classified as «fundamentally acceptable».

What remained was a single disputed transfer of 500,000 euros (around $570,000) from August 2017, declared as a loan tranche. Its incomplete documentation, the court found, does not reach the threshold of a serious violation of supervisory law. Nothing more was left of the foundation for the disgorgement of 440,117 francs.

Exculpatory Elements «Not Considered at All»

The bank's internal remediation from June 2021 onward, finally – assessed as appropriate by the investigating agent Finma later appointed – was «not considered at all» by the supervisor, which thereby «not only established the facts incompletely but assessed them incorrectly in essential respects».

From all of this follows the decision to set aside all substantive elements of the ruling. 

VP Bank Welcomes Court Decision

In a statement for finews, the bank writes: «VP Bank (Switzerland) welcomes the fact that the Federal Administrative Court has upheld its appeal on the essential points.»

The court, the bank continues, concludes «that Finma, in its assessment, did not sufficiently take into account the improvements in compliance and money laundering prevention already initiated and implemented by the bank». The judgment «underscores that supervisory measures must be based on an assessment of the situation as it stood at the time and must not proceed from a retrospective point of view».

In view of the judgment not yet being final, the bank declines to comment further. And: «As a matter of principle, we do not comment on individual client relationships or persons named.»

Substantial Costs

The judgment is nonetheless no clean bill of health for VP Bank (Switzerland): The court does find documentation and clarification shortcomings, for instance in connection with payments in the millions that flowed through private accounts declared as «bonuses». But those failings were either time-barred or did not reach the threshold of a serious violation of supervisory law.

Although it prevailed on the merits across the board, the bank is left with substantial costs: It had not specifically contested the investigating agent's bill of almost 616,000 francs or the procedural costs of 150,000 francs before the court. Those items therefore stand. It is awarded party compensation of 30,000 francs.

How the Case First Became Public

With the complaint for denial of justice mentioned at the outset, filed in July 2024, the bank sought to compel the supervisor to issue a formal ruling on the question of informing the public – and did obtain a super-provisional order barring Finma, for the time being, from informing the public about the proceedings.

Six weeks later, the Federal Administrative Court declined to even entertain the complaint: Finma had neither informed the public nor ordered the publication of its ruling – the bank's request had thus effectively been met, and for a ruling «that merely confirms what has not happened», any legitimate interest was lacking.

It was only this court decision that drew the attention of newswire AWP and, subsequently, financial portal Tippinpoint to the matter. At the time, the bank confirmed to Tippinpoint that the ruling was «mainly related to one client relationship, which was, however, already closed in 2020» – a description consistent with the judgment now handed down.

A Systemic Finma Problem?

finews discussed the judgment with experts on enforcement matters. It emerges that its significance may well extend beyond the individual case.

As conversations with bank lawyers and compliance officers show, the industry has for some time been quietly asking whether Finma's enforcement around the Russia sanctions generally operated from a hindsight perspective: Did Finma retroactively measure business relationships that appeared unremarkable before February 2022 against the yardstick of later sanctions lists?

Hardly Any Institution Litigated

Finma is understood to have initiated a larger number of similar proceedings over sanctioned Russians.

Yet hardly any institution fought back. Most affected banks accepted the supervisor's orders – out of concern for their relationship with the regulator, and because a legal challenge creates publicity that banks shun internationally in the context of sanctioned Russian clients. The present case, in which a bank had Finma's intervention reviewed by a court, is therefore a rarity.

The Industry's Whispered Suspicion

Its outcome before the Federal Administrative Court, however, lends additional plausibility to the industry's whispered suspicion: Could it be that behind the individual case now dismantled by the court lies an enforcement mentality that is problematic in terms of the rule of law – has the «inadmissible hindsight bias» effectively been institutionalized?

Finma does not disclose how many Russia-related enforcement proceedings it has conducted since 2022: It reports concluded proceedings «only in aggregate and not by topic». It did not, however, contradict the account that a larger number is involved.

Finma Announces Appeal to Highest Court

The financial market supervisor furthermore announces it will appeal the Federal Administrative Court's judgment: «Finma will file an appeal with the Federal Supreme Court within the deadline. As we are challenging the judgment, we cannot comment further on the ongoing proceedings.»

Confronted with the suspicion that it systematically measured earlier business relationships that appeared unremarkable before February 2022 retroactively against the yardstick of later sanctions lists, Finma writes: «Finma rejects this account in the strongest terms.»

Be that as it may: For Finma, the decision comes at an inopportune time. The authority is lobbying in Bern for sharper enforcement instruments. Among other things, it wants to be able to publicly name the parties to enforcement proceedings more often.