Rabobank NA sentenced for conspiring to impair, impede, and obstruct its primary regulator
Staff Writer |
Rabobank National Association (Rabobank), a Roseville, California subsidiary of the Netherlands-based Coöperatieve Rabobank U.A., was sentenced by U.S. District Judge Jeffrey T. Miller of the Southern District of California.
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It was sentenced for impairing, impeding and obstructing its primary regulator, the Department of the Treasury’s Office of the Comptroller of the Currency (the OCC), by concealing deficiencies in its anti-money laundering (AML) program and for obstructing the OCC’s examination of Rabobank.
Rabobank was sentenced to a two-year term of probation, and ordered to pay the statutory maximum fine of $500,000. Additionally, as part of its guilty plea, Rabobank forfeited $368,701,259 to the United States as a result of allowing illicit funds to be processed through the bank.
Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Adam L. Braverman for the Southern District of California, Special Agent in Charge Dave Shaw of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in San Diego and Special Agent in Charge R. Damon Rowe of Internal Revenue Service Criminal Investigation (IRS-CI) Los Angeles Field Office made the announcement.
On Feb. 7, Rabobank pleaded guilty to conspiracy to defraud the United States and to corruptly obstruct an examination of a financial institution.
Specifically, Rabobank admitted to conspiring with several former executives to defraud the United States by unlawfully impeding the OCC’s ability to regulate the bank and to obstruct the OCC’s 2012 examination of Rabobank’s Bank Secrecy Act (BSA)/AML compliance program.
In connection with that guilty plea, Rabobank admitted that between 2009 and 2012 it implemented BSA/AML policies and procedures that precluded and suppressed its investigations into potentially suspicious transactions near the U.S.-Mexico border, much of which was conducted by customers and through accounts that Rabobank had previously designated “High-Risk.â€
As a result of its BSA/AML failures, Rabobank admitted that certain customer accounts were involved in not less than $368,701,259 in suspicious transactions that were either unreported or untimely reported to the Financial Crimes Enforcement Network (FinCEN), as required by the BSA.
These transactions included high-volume cash deposits and withdrawals, check transactions, electronic transfers, and wire transfers that were consistent with illegal activity such as trade-based money laundering, bulk cash smuggling, structuring, and the black market peso exchange.
According to its statement of facts, Rabobank’s branches in Imperial County, California were heavily dependent on cash sourced from Mexico – cash the bank knew was likely tied to narcotics trafficking and organized crime.
In particular, Rabobank’s Calexico, California branch, located approximately two blocks from the U.S.-Mexico border, was the highest performing branch in the Imperial Valley region due to its receipt of cash from Mexico.
Rabobank continued soliciting cash-intensive customers from Mexico, while failing to employ appropriate BSA/AML policies and procedures to address the heightened risk, until approximately May 2013, when Rabobank placed a moratorium on originating new account relationships for Mexico-based businesses entities.
Rabobank also admitted that the bank, through at least three executives, knowingly obstructed the OCC’s 2012 examination by responding to the OCC’s February 2013 initial report of examination with false and misleading information about the state of Rabobank’s BSA/AML program and by making false and misleading statements to the OCC regarding the existence of reports developed by a third-party consultant that described the deficiencies and resulting ineffectiveness of Rabobank’s BSA/AML program.
In furtherance of the scheme to defraud the OCC, Rabobank also demoted or terminated two RNA employees who provided information to the OCC regarding Rabobank’s BSA/AML deficiencies. ■