Rabobank, N.A. pleaded guilty in February 2018 and agreed to pay $368.7 million for permitting and concealing BSA/AML failures at its rural California branches — which processed hundreds of millions in untraceable bulk cash from Mexico tied to drug trafficking — and for obstructing an OCC examination when executives learned regulators were discovering the deficiencies.

Rabobank, N.A. — $369 Million Guilty Plea: BSA/AML Failures and OCC Obstruction (2018)

Outcome: Rabobank, N.A. of Indio, California — the U.S. subsidiary of the Dutch financial institution Rabobank — pleaded guilty on February 7, 2018 to one count of conspiracy to obstruct OCC supervision and agreed to pay $368.7 million, having permitted hundreds of millions in untraceable bulk cash from drug trafficking to be processed through its Imperial County, California branches without adequate AML review while actively obstructing the OCC examination that began to uncover these failures.

Rabobank, N.A. operated a network of community banking branches in California's rural Imperial County and adjacent areas — regions with elevated money laundering risk due to proximity to the U.S.-Mexico border. Beginning around 2009, the bank's AML program developed severe deficiencies that allowed drug trafficking proceeds to flow through these branches as bulk cash deposits and wire transfers. Rather than file Suspicious Activity Reports as required by the BSA, Rabobank processed hundreds of millions of dollars in untraceable cash sourced from Mexico and elsewhere without adequate AML controls or required federal notifications.

The case is particularly notable for the obstruction element. When the OCC began examining Rabobank's AML program around 2012, bank executives — including the CEO, CCO, and general counsel — learned that examiners were discovering the compliance deficiencies and took active steps to conceal the failures from regulators rather than disclose and remediate them. This obstruction led the DOJ to pursue a criminal guilty plea rather than a civil deferred prosecution agreement, reflecting the most serious prosecutorial response available for BSA violations.

The $368.7 million penalty was a forfeiture of funds representing illicit proceeds processed through the bank. The OCC subsequently completed a rare C-suite sweep of individual enforcement actions, assessing civil money penalties against the CEO, Chief Compliance Officer, and general counsel for their roles in permitting and concealing the BSA/AML failures. Former Rabobank vice president George Martin entered a separate deferred prosecution agreement in December 2017.

Primary Source: DOJ Press Release — Rabobank NA Pleads Guilty, Agrees to Pay Over $360 Million (February 2018)