Rabobank: Concealed AML Deficiencies and Obstruction of the OCC Examination

Rabobank agreed to a $50 million civil penalty from the Office of the Comptroller of the Currency over failed anti-money laundering controls, missed reports and obstruction of examiners, while its guilty plea admitted deceiving the regulator about the bank’s controls. The bank already knew which accounts it considered high risk. Its own policies suppressed investigations into suspicious activity, and it later gave examiners false answers about the program meant to catch it.

Rabobank National Association was the Roseville, California subsidiary of Netherlands-based Coöperatieve Rabobank U.A. In its February 7, 2018 guilty plea, the U.S. bank admitted conspiring with former executives to defraud the United States and obstruct the regulator’s 2012 examination of its Bank Secrecy Act compliance program.

The admissions connect decisions an anti-money laundering employee might see separately: how the bank treated risky accounts, whether investigations went forward, what reached the government and what management said when examiners arrived.

The Border Business Behind the AML Failures

In its guilty plea, Rabobank admitted that between 2009 and 2012 it used policies and procedures that prevented or suppressed investigations into potentially suspicious transactions near the U.S.-Mexico border. Much of that activity involved customers and accounts the bank had already designated high risk. The warning was already inside the bank’s own system.

The bank’s statement of facts, as described in the Justice Department’s announcement, explains the commercial attraction. Its Imperial County branches depended heavily on cash from Mexico that the bank knew was likely tied to narcotics trafficking and organized crime. The Calexico branch, approximately two blocks from the border, was the highest performing branch in the Imperial Valley region because of its receipts of Mexican cash.

The bank treated cash it knew was likely tied to narcotics trafficking as good business. Rabobank continued soliciting cash-intensive Mexican customers without appropriate controls for the heightened risk until approximately May 2013, when it stopped originating new account relationships for Mexico-based businesses.

The plea admissions describe high-volume cash deposits and withdrawals, along with checks, electronic transfers and wires. The bank acknowledged patterns consistent with trade-based money laundering, bulk cash smuggling, structuring and the black market peso exchange.

Missed Reports Left the Government Without the Information

Rabobank admitted in its guilty plea that certain customer accounts were involved in not less than $368,701,259 in suspicious transactions that went unreported or reached the Financial Crimes Enforcement Network late.

Its investigation and reporting decisions determine which concerns become available for government scrutiny.

The 2024 Wharton Initiative on Financial Policy and Regulation paper Anti-Money Laundering: Opportunities for Improvement explains why this dependence matters:

The paper identifies a reason for that arrangement: banks and public agencies possess different information and expertise. In Rabobank’s case, the bank’s admitted suppression of investigations and reporting failures impaired the information that arrangement depends on. Then the bank misled the examiners too.

How Rabobank Obstructed the OCC Examination

Rabobank admitted in its guilty plea that it knowingly obstructed the regulator’s examination through at least three executives. The concealment concerned both the condition of the anti-money laundering program and the existence of outside reports describing its failures.

When the Comptroller’s office issued its initial report on the 2012 examination in February 2013, the bank responded with false and misleading information about its Bank Secrecy Act and anti-money laundering program.

The bank also admitted making false and misleading statements about the existence of reports prepared by a third-party consultant. Those reports described the program’s deficiencies and resulting ineffectiveness. An outside review had put the weaknesses in writing, and the bank misled the regulator about whether those reports existed.

For someone who worked on an investigation, an audit or a response to an examiner, those are recognizable decisions. A consultant’s findings and management’s account to the regulator can tell different stories about the same controls. In Rabobank’s plea, that difference was admitted concealment.

The Bank’s Civil Order and the Officer’s Dismissed Case

The Comptroller’s February 6, 2018 consent order addressed the bank’s Bank Secrecy Act program, suspicious activity reporting and examination obstruction.

The former chief compliance officer’s separate case before the regulator ended with the charges dismissed on April 5, 2023.

What Are the Red Flags for AML Transaction Monitoring?

In Rabobank’s admitted conduct, the red flags were high-risk accounts whose activity was not properly investigated, policies that suppressed investigations and suspicious transactions that went unreported or were reported late. The examination added another revealing comparison: what the bank’s consultant had found against what executives told the regulator.

That work gives investigators, auditors, onboarding staff, monitoring teams and operations employees different views of the same relationship. An investigator may know which review was stopped. An auditor may know what a consultant found. Someone preparing an examination response may know what management told the OCC.

The Same Pattern at U.S. Bank

The pattern also appears in the U.S. Bank case. Under its 2018 deferred prosecution agreement, parent company U.S. Bancorp accepted responsibility for conduct at U.S. Bank that included limiting transaction-monitoring alerts to staffing capacity and failing to report suspicious activity on time. An internal limit on the work changed what received attention. Rabobank’s plea shows how policies suppressing investigations could be followed by concealment from the regulator.

What an AML Insider Can Bring to a Case

We help insiders show who made each decision and what it hid.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Bank Secrecy Act information has a separate whistleblower reward framework, which we assess with you.

You Know What the Examiners Were Told

If you saw investigations suppressed or an examination response conceal known AML failures, tell our whistleblower experts what happened inside the bank. We build the case with you around those decisions and bring in AML whistleblower lawyers who understand bank controls and regulatory examinations. Speak to us about building your strongest AML whistleblower case, with our experts beside you throughout the process.