CA Bank Pleads Guilty to Fraud, Forfeits $368M

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For years, the California subsidiary of Netherlands-based Rabobank had been warned of serious deficiencies in its anti-money laundering program, especially at its branches that operate along the U.S.-Mexico border and are at high risk for drawing business from drug cartels and other organized crime groups. In 2006 and 2008, the bank entered into agreements with government financial regulators to shape up. It didn’t, reports the San Diego Union-Tribune. On Wednesday, the bank pleaded guilty to a felony criminal charge of conspiracy to defraud the U.S. and agreed to forfeit $368.7 million, the estimated amount of suspicious transactions that went unchecked over a four-year period. The forfeiture marks the largest financial penalty in the San Diego region.

In a plea agreement, the bank admitted to failing to investigate or alert regulators to cash-heavy transactions that likely stemmed from criminal operations in Mexico, and instead continued to solicit additional business from questionable customers. When the U.S. Department of the Treasury’s Office of the Comptroller of the Currency tried to investigate the most recent allegations against the bank, high-level bank executives in 2013 obstructed the probe, provided false and misleading information and fired a colleague who spoke out about the bank’s failings. The investigation is continuing, and more prosecutions are expected. The suspicious activity involved branches in Calexico and Tecate, in accounts controlled by Mexican businesses, non-U.S. residents and U.S. residents who transacted hundreds of millions of dollars in untraceable cash from Mexico and elsewhere.

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