Rabobank National Association to pay USD $360m to settle money-laundering case

The case concerns transactions processed in California between 2009 and 2012

A subsidiary of Dutch financial co-operative Rabobank has pleaded guilty to trying to obstruct the regulator’s examination of its operations throughout California.

Rabobank National Association will also pay a USD $360m fine for having processed funds from likely illicit activities.

The case concerned transactions processed between 2009 and 2012. In pleading guilty, Rabobank admitted that its deficit anti money laundering (AML) programme led to 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 without proper notification to federal regulators, as required by law.

According to a statement published by the Department of Justice, when the bank’s regulator, the Office of the Comptroller of the Currency, examined its Bank Secrecy Act (BSA) and Anti-Money Laundering compliance programme in 2012, Rabobank executives “sought to hide and minimise the deficiencies”.

“When Rabobank learned that substantial numbers of its customers’ transactions were indicative of international narcotics trafficking, organised crime, and money laundering activities, it chose to look the other way and to cover up deficiencies in its anti-money laundering programme,” said acting assistant attorney General 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 today and forfeiture of more than USD $360m 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 programme failures from their regulators.”

“Rabobank had an obligation to shine light on suspected drug traffickers, money launderers and organised crime,” said US attorney Braverman. “Instead, this bank deliberately allowed hundreds of millions of dollars of suspicious cash transactions and wire transfers to flow through its branches and took measures to hide this activity from regulators.

“We will vigorously protect the integrity of the banking system, and we will not allow the financial institutions in our communities to play any role in facilitating international money laundering or financing transnational criminal organisations.”

The BSA requires financial institutions to implement and maintain an AML compliance programme that detects suspicious activity indicative of money laundering and other crimes and assures and monitors compliance with the BSA’s record-keeping and reporting requirements, including reporting to the US Department of the Treasury any suspicious transactions.

Wiebe Draijer, chair of the Rabobank Managing Board, said in a statement: “The findings at our subsidiary RNA relate to events that took place before 2014. The violations that took place are serious, regrettable and unacceptable. Rabobank is fully committed to conducting business with the highest levels of integrity, which includes strict compliance with all applicable laws, regulations, and standards in each of the markets and jurisdictions in which it operates.

“Rabobank and RNA co-operated fully with all authorities, who specifically acknowledged the bank’s co-operation. RNA, with the full support and backing of Rabobank, has made very strong efforts to strengthen its internal controls and risk management functions, which is also recognised by the authorities.”

The settlement comes two months after former vice president of Rabobank, George Martin, entered into a deferred prosecution agreement in which he admitted to his role in the bank’s failure to maintain a proper anti-money laundering programme.

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