Rabobank to forfeit over $500 million in money-laundering case

An investigation concluded the money was used to launder millions in Mexican drug money. Photo / AP

Dutch lender Rabobank's California subsidiary agreed Wednesday to forfeit US$369 million ($510.8m) after a long-running investigation concluded it was used to launder millions of dollars in Mexican drug money.

Rabobank National Association also pleaded guilty to one count of conspiracy to defraud the United States.

U.S. Magistrate Judge Jill Burkhardt did not provide details during a brief hearing, but Rabobank said last month that the subsidiary would likely acknowledge that employees hid information from regulators nearly five years ago.

It marks one of the largest U.S. settlements involving the laundering of Mexican drug money, though it's still only a fraction of the US$1.9 billion that Britain's HSBC agreed to pay in 2012.

The Rabobank settlement surpasses the $160 million that Wachovia Bank agreed to pay in 2010.

Rabobank attorney James Cavoli declined to speak with reporters outside the courtroom. Company representatives have not responded a phone message and emails seeking comment.

Last month, former bank subsidiary compliance officer George M. Martin agreed to cooperate with authorities in a deal that delays his prosecution for two years.

Martin, a vice president and anti-money laundering investigations manager, acknowledged he oversaw policies and practices that blocked or stymied probes into suspicious transactions and said he acted at the direction of supervisors, or at least with their knowledge.

He told investigators that he and others allowed millions of dollars to pass through the bank without adequate scrutiny, despite being warned about the client.

Investigators say the business came from a Mexican customer who made more than US$10m in suspicious transactions.

They say a bank in Calexico on the Mexico border wanted more business.

Authorities seized the account in 2011 on suspicion it was being used to move millions of dollars in drug proceeds.

Martin and others were accused of failing to alert authorities to other suspicious activity at branches in Calexico and Tecate, another border town.

In 2009 and 2010, investigators say, employees allowed a Mexican client to withdraw nearly US$500,000 in amounts just under federal reporting requirements, even though the client had been reported to the Treasury Department at least 25 times for suspicious activity.

The efforts to hide suspicious activity occurred from 2009 to 2012.

Rabobank, based in Utrecht, Netherlands, said U.S. authorities began investigating in 2013 whether the subsidiary violated the U.S. Bank Secrecy Act and other laws and regulations.

- AP