Rabobank’s AML problems result in huge fines

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WASHINGTON — The U.S. banking arm of the Dutch lender Rabobank has forfeited nearly $370 million for anti-money-laundering deficiencies that authorities say allowed untraceable money transfers on behalf of criminals and for hiding information from U.S. regulators.

The Justice Department and the Office of the Comptroller of the Currency announced the settlements Wednesday in which Rabobank's U.S. unit in California pleaded to one count of conspiracy to defraud the U.S. government.

Rabobank admitted that its weak AML controls "allowed hundreds of millions of dollars in untraceable cash, sourced from Mexico and elsewhere, to be deposited into its rural bank branches," the Justice Department said in a press release.

“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,” acting Assistant Attorney General Cronan said in the press release.

The bank, based in Roseville, Calif., also admitted to conspiring with several former executives who hid information from OCC officials during a 2012 examination of its Bank Secrecy Act and anti-money-laundering compliance program. In its settlement with the Justice Department, the bank agreed to forfeit over $368.7 million.

"Rabobank’s guilty plea today 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," acting Assistant Attorney General Cronan said in a press release.

Rabobank also agreed to pay a $50 million civil money penalty to the OCC, which will be part of overall amount assessed by the Justice Department.

A new OCC order, on Jan. 18, said that since 2012 "the bank failed to establish and maintain a compliance program that adequately covers the required BSA/AML elements."

"The Bank did not develop adequate systems to monitor, investigate and report suspicious customer activity, particularly cross-border and high-volume cash activity," the order said.

The OCC said the consent order issued in late 2013 required Rabobank to hire an independent consultant who later found the bank had failed to report more than $233 million in suspicious activities from 2010 to 2013.

Since then, Rabobank has corrected the problems and paid the $50 million penalty, causing the Comptroller's Office to terminate the 2013 order.

“The OCC has determined that the bank has implemented all of the corrective actions required by the 2013 consent order and has achieved compliance with the requirements set forth in that order,” the regulator said in a press release.

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Enforcement Enforcement actions AML Community banking OCC DoJ