Rabobank Agrees to Pay $368MM+ in Anti-Money Laundering Case

According to a report from the Office of the Comptroller of the Currency (OCC), Rabobank, a Roseville, CA subsidiary of the Netherlands-based Cooperative Rabobank, pleaded guilty to a felony conspiracy charge for impairing, impeding and obstructing its primary regulator, the OCC, by concealing deficiencies in its anti-money laundering (AML) program and for obstructing the OCC’s examination of Rabobank.

According to the report, Rabobank will forfeit $368.7 million as a result of allowing illicit funds to be processed through the bank without adequate Bank Secrecy Act (BSA) or AML review.

At a hearing, Rabobank pleaded guilty to conspiracy to defraud the U.S. and to corruptly obstruct an examination of a financial institution. In pleading guilty, Rabobank admitted to conspiring with several former executives to defraud the U.S. by unlawfully impeding the OCC’s ability to regulate the bank, and to obstruct an examination by the OCC of its operations throughout California, including its Calexico and Tecate bank branches.

Rabobank admitted that its deficient AML program allowed hundreds of millions of dollars in untraceable cash, sourced from Mexico and elsewhere, to be deposited into its rural bank branches in Imperial County, and transferred via wire transfers, checks and cash transactions, without proper notification to federal regulators as required by law.

Knowing these failures, during the OCC’s 2012 examination of Rabobank’s BSA/AML compliance program, Rabobank executives actively sought to hide and minimize the deficiencies in its AML program in an effort to deceive the regulators as to its true state in hopes of avoiding regulatory sanctions that had previously been imposed on Rabobank in 2006 and 2008 for nearly identical failures.

Rabobank’s guilty plea comes less than two months after a former Rabobank vice president, George Martin, entered into a deferred prosecution agreement with the U.S. for his role in aiding and abetting Rabobank’s failure to maintain an AML program that met BSA requirements. Martin admitted his conduct in federal court in San Diego on December 14, 2017. As part of its guilty plea, Rabobank agreed to cooperate with the U.S.’s continuing investigation.

“When Rabobank learned that substantial numbers of its customers’ transactions were indicative of international narcotics trafficking, organized crime and money laundering activities, it chose to look the other way and to cover up deficiencies in its anti-money laundering program,” said Acting Assistant Attorney General John P. Cronan. “Worse still, Rabobank took steps to obstruct an examination by its regulator into those same deficiencies. The integrity of our financial system depends on prompt reporting by banks and other financial institutions of suspicious, potentially criminal transactions, and on these entities’ truthfulness and transparency with their regulators. Rabobank’s guilty plea and forfeiture of more than $360 million is a warning to financial institutions that there are significant consequences for banks that engage in obstructive conduct in an effort to hide their anti-money laundering program failures from their regulators.”

Like this story? Begin each business day with news you need to know! Click here to register now for our FREE Daily E-News Broadcast and start YOUR day informed!

Leave a comment

View Latest Digital Edition

Terry Mulreany
Subscriptions: 800 708 9373 x130
[email protected]
Susie Angelucci
Advertising: 484.459.3016
[email protected]

View Latest Digital Edition

Visit our sister website for news, information, exclusive articles,
deal tables and more on the asset-based lending, factoring,
and restructuring industries.