Thread: Former Rabobank VP admits scheme that allowed money laundering at Imperial County CA.

Former Rabobank VP admits scheme that allowed money laundering at Imperial County branches

Kristina Davis Contact Reporter

A California subsidiary of the Netherlands-based Rabobank announced this month it plans to plead guilty in connection with a long-running investigation into the bank’s anti-money laundering program.

The news comes just weeks after a former bank vice president admitted in San Diego federal court to turning a blind eye to suspected drug money flowing through Imperial Valley branches.

The case against George M. Martin, a vice president of Rabobank National Association and the bank’s anti-money laundering investigations manager, foreshadows the larger U.S. Department of Justice investigation into Rabobank and implicates other unnamed high-level personnel.

The U.S. Attorney’s Office in San Diego has offered Martin a deferred prosecution agreement, meaning he won’t be prosecuted with aiding and abetting violations of the Bank Secrecy Act so long as he continues to cooperate with the investigation into the bank. Martin, who lives in Texas, accepted the deal on Dec. 14.

Last week, Rabobank National Association announced to shareholders it has set aside $374 million in anticipation of settling DOJ investigations into its anti-money laundering compliance program. The announcement describes the expected upcoming guilty plea by the bank to be for “a single offense related to former employees’ withholding of information” from the U.S. Department of the Treasury nearly five years ago.

A Rabobank spokesman declined to discuss the case, saying in an email statement Friday: “As is our standard practice, we do not comment on former or current employees.”

Banks are required under the Bank Secrecy Act to help the government track and prevent money laundering, including filing reports called Suspicious Activity Reports, or SARs, to the U.S. Financial Crimes Enforcement Network, or FinCEN, when bank staff spot certain red flags in accounts.

Martin headed Rabobank’s California unit that was supposed to ferret out illegal activity, but his deferred prosecution agreement lays out a pattern of policy and procedures at the bank from 2009 to 2012 that let high-risk account holders avoid proper investigation, in turn allowing them to funnel millions of dollars in suspicious cash and wire transactions through the bank’s Tecate and Calexico branches, prosecutors said.

One way of doing this was to add accounts to a “verified activity list,” meaning the account holders were supposedly already vetted and didn’t require further scrutiny. In March 2012, Martin emailed his investigations staff stating that increasing the number on the verified activity list “continues to be an area of interest for (Martin) as this will continue to reduce the amount of actual suspects we have to work, month after month,” according to court documents.

There were less than 10 accounts on the verified activity list in 2009, a number that grew to more than 1,000 in 2012.

In February 2010, Martin and others were told about potential money-laundering activity in a Mexican-based business account at a Calexico branch, but they decided not to investigate further, or file a Suspicious Activity Report, because the bank’s staff wanted to solicit additional business from the customer, the deferred prosecution agreement says.

In August 2011, law enforcement seized those funds on suspicion the accounts were being used to move millions of dollars in drug proceeds — more than $10 million in suspicious cash and wire transactions passed through the account from 2009 to 2011. And even then, Martin and others didn’t take action on the account until October 2012, the agreement states.

Also in February 2010, Martin and others ignored red flags in an account held by a Mexican-based business that made large sequential withdrawals in suspicious patterns and issued about 50 checks for $9,500 each, likely to avoid the $10,000 deposit threshold that triggers a currency transaction report by the bank. The checks were cashed by 12 people who each got about $484,500 total on the same day at different times at the bank’s Tecate branch.

The account holders and their related businesses had at least 25 prior Suspicious Activity Reports filed against them. But, according to the deferred prosecution agreement, Martin told employees not to file reports for these transactions, writing in an email: “No more SARs for them!”

The deferred prosecution agreement means Martin must cooperate with investigators and also complete 50 hours of community service. If he follows through, then the case will be dropped against him after two years.

http://www.sandiegouniontribune.com/...106-story.html

US branch of Dutch Rabobank to pay big for drug money laundering

The US branch of Rabobank has entered into a plea deal after it was accused of laundering hundreds of millions of dollars for drug traffickers. The settlement was one of the largest in history involving Mexican cartels.



The US subsidiary of the Dutch bank Rabobank will have to pay $369 million (€301 million) to government authorities after it pled guilty to hiding information from investigators.

The bank was part of a money laundering scheme that hid drug money from Mexico.

How the crime unfolded

• Between 2009 and 2012, Rabobank handled hundreds of millions of dollars from Mexican drug dealers.
• The Justice Department was alerted when the bank's office in Calexico, California, two blocks from the US-Mexico border suddenly became the firm's best-performing branch.
• The bank maintained a list of "verified" customers whose suspicious transactions were not put under review when they were flagged by internal control systems.
• The list expanded from 10 clients in 2009 to more than 1,000 by 2012.
• In 2012, bank executives obstructed a probe into their conduct by lying to Treasury Department investigators and firing employees who questioned the bank's dubious practices.

Read more: Police arrest Brazil's cocaine kingpin Luiz Carlos da Rocha

Turning a blind eye

"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," said Justice Department official John Cronan.
Rabobank's lawyer James Cavoli declined to speak to the press, and the company has yet to release a statement on the plea deal.

What's significant: The settlement is among the largest in history for laundering Mexican drug money, although it's still significantly less than a 2012 fine paid by HSBC, which was $1.9 billion, for money laundering. In 2010, Wachovia Bank paid $160 million for similar crimes.

What happens next: Rabobank must pay $369 million for the money it laundered, $50 million of which is a fine from the Treasury Department.

http://www.dw.com/en/us-branch-of-du...ing/a-42494083

I wonder if drug cartel was using the laundering Rabobank.