A gavel rests on its sounding block with a several law books and a justice scale out of fucus in the background. A cool blue cast dominates the scene. (A gavel rests on its sounding block with a several law books and a justice scale out of fucus in t

Swiss wealth management firm Julius Baer International Ltd. is paying an £18-million fine in a settlement with the U.K. Financial Conduct Authority (FCA) over allegations that it failed to identify and report suspicious dealings with an employee of Russian conglomerate Yukos Group.

According to the regulator’s notice, the firm paid US$3 million in “finder’s fees” to an employee of Yukos, which in turn placed large amounts of money with the bank. It also engaged in “uncommercial” foreign exchange transactions that charged commissions, which were far higher than usual, generating revenues for the firm and payouts to the Yukos employee.

“These fees were improper and together with the uncommercial FX transactions showed a lack of integrity in the way in which JBI was undertaking this business,” the FCA said.

The regulator also found that the firm didn’t have adequate policies in place to identify and report possible corrupt dealings. Even after the arrangements were uncovered and it suspected that a potential fraud had been committed, “it did not report these matters to the FCA immediately as required,” it said.

Along with the sanctions against the firm, the FCA banned three former employees — executives in the bank’s Russian and Eastern European division that were involved with the Yukos relationship. However, those former employees are appealing the regulator’s decision to the Upper Tribunal.

Julius Baer admitted to the regulator’s allegations and agreed to settle, which qualified it for a discount on the regulator’s fine. Without the discount, the firm would have been fined £24.5 million, the FCA said.

In a statement, the firm said that it accepted the regulator’s findings and it apologized for the failings.

It also said that it has made full restitution to the companies that were impacted and that, following an internal investigation, it made “significant changes to the company’s leadership, governance, systems and processes, including that JBI no longer accepts any finders’ business.”

“Since this wrongdoing took place, we have implemented significant organizational changes. With a reformed governance structure, a new management team and a remodelled risk and compliance function, our clients can trust we will always safeguard their interests,” said David Durlacher, CEO of JBI, in a statement.