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Thursday
Feb082018

Rabobank pleads guilty, forfeits $369 million for laundering Mexico drug money

The U.S. unit of Netherlands-based Rabobank pleaded guilty Wednesday to a felony conspiracy for concealing defects in its anti-money laundering program and obstructing a federal investigation.

Rabobank National Association based in Roseville, California will forfeit $368.7 million for allowing Mexican drug money to be processed through the bank.

The bank appeared Wednesday in federal court in San Diego. It pleaded guilty (pdf) to conspiracy to defraud the United States and to corruptly obstruct an examination by the Office of the Comptroller of the Currency (OCC).

Rabobank took cash deposits of hundreds of millions of dollars at its California border-town branches in Calexico and Tecate. Then it let customers transfer the money via wire transfers, checks, and cash transactions, without notifying federal regulators as required by law.

The bank hid what it was doing from the OCC during a 2012 examination. It wanted to avoid "regulatory sanctions that had previously been imposed . . .  in 2006 and 2008 for nearly identical failures," the DOJ said.

Two months ago, Rabobank’s former anti-money-laundering investigations manager, George Martin, pleaded guilty to aiding and abetting AML failures. He agreed to cooperate with federal investigators under a two-year deferred prosecution agreement.

Rabobank's AML system alerted staff to suspicious accounts. But managers told the staff to ignore the alerts if a customer appeared on a “Verified List.”

In 2009, there were less than ten “verified” customers. By 2012, there were more than 1,000 “verified” customers, the DOJ said.

Rabobank sought "cash-intensive customers" from Mexico and elsewhere, knowing the money came from drug deals and other criminal activity, the DOJ said.

The bank's Calexico branch -- just two blocks from the U.S.-Mexico border -- was the “highest performing” branch in southeastern California.

One bank employee who raised AML concerns was fired and another was demoted.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.