Rabobank Fined $369 Million for Laundering Mexican Drug Money

The U.S branch of Rabobank National Association based in the Netherlands has plead guilty to hiding known flaws in their anti-money laundering (AML) programs and for obstructing a federal investigation.  Rabobank reached a settlement of $368.7 million for laundering illicit drug money from Mexico and in exchange the government will not pursue further charges against Rabobank, or require special monitoring over the company as long as Rabobank fully cooperates with the investigation.

In federal court in San Diego, Rabobank also plead guilty to conspiracy to defraud the U.S along with obstructing an investigation conducted by the Office of the Comptroller of the Currency (OCC).  The Department of Justice (DOJ) stated that Rabobank hid their violations in fear of “regulatory sanctions that had previously been imposed…in 2006 and 2008 for nearly identical failures.”  Although Rabobank was alerted to money laundering within their systems, the bank chose to ignore the warnings and, in 2012, a whistleblower executive alerted the company to suspicious activity but was ignored and later fired in 2013.

George M. Martin, former Compliance Officer, Anti-Money Laundering Investigations Manager and Vice President at Rabobank made a deal to delay the prosecution for 2 years on the basis that he cooperates with the authorities.  Martin stated that he was not the only employee who allowed transactions of millions of dollars to be passed through the bank, and that he acted through the orders of his supervisors.  Martin later plead guilty in December 2017 for assisting in the AML violations. The investigation also found that employees were told to ignore Rabobank’s AML system when they alerted employees to suspicious accounts if the customers were on the “verified list”.  The DOJ found that in 2009, Rabobank only had ten “verified” customers, which later grew to over 1,000 in 2012.

Rabobank’s number of illicit accounts increased greatly after Mexico introduced a limit on cash deposits at banks in 2010, specifically the branches located in Calexico and Tecate.  Over $100 million was passed through the Calexico branch and $1 million per year was withdrawn from the Tecate branch in transactions just below the reporting regulations.  The DOJ stated that bank officials knew the increase in accounts and that the money was likely tied to drugs and organized crime but did nothing to stop it.

Sentencing for Rabobank is set for May 18.


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