Rabobank Pays $368M Fine Over Illicit Funds

Rabobank, a California unit of the Dutch cooperative, agreed Wednesday (Feb. 7) to turn over $368 million for processing funds that were tied to illicit activity, such as drug trafficking.

According to a report in Reuters, Rabobank pleaded guilty in federal court to conspiring to obstruct regulatory oversight.

The U.S. Department of Justice (DoJ) claimed that the bank permitted hundreds of millions of dollars in cash from Mexico and other non-traceable locales into its California bank branches. The bank then allowed the funds to be transferred without monitoring or reporting transactions that appeared to be suspicious. In a statement, U.S. Attorney General John Cronan said the bank opted to “look the other way” when it learned that transactions may be tied to illicit activity.

Reuters reported that separately, the U.S. Office of the Comptroller of the Currency (OCC), which is Rabobank’s main regulator, announced it slapped the bank with a $50 million penalty for falling short of the Bank Secrecy Act and the anti-money laundering compliance program. The OCC said the civil penalty will be credited toward the $368 million fine that the DoJ slapped on Rabobank.

In a statement to Reuters, Rabobank said the agreements with the DoJ and the OCC ends the investigations into its business and conduct by ex-workers. “Settling these matters is important for the bank’s mission here in California,” said Mark Borrecco, chief executive officer of Rabobank. The CEO also said the bank has enhanced its risk management and internal controls to prevent similar events from happening in the future.

The guilty plea on the part of Rabobank took place in U.S. District Court in San Diego.