Rabobank to pay a $373 million fine for money laundering for drug cartels

January 22, 2018

In what appears to be an attempt to avoid a criminal indictment, Rabobank is planning to pay a $373 million fine to the U.S. government for alleged money laundering for Mexican drug cartels, allegations first raised by an Arroyo Grande branch bank employee. [Cal Coast Times]

Beginning in about 2010, bank management would routinely send armored trucks to pick up cash at its branch in Calexico, a tiny town just across the border from Mexicali. Wire transfers were then sent from the Rabobank in Calexico to customers across the border, according to bank insiders.

The Bank Secrecy Act of 1970 requires banks in the United States to work with the government to detect and prevent money laundering. But, bank officials allegedly instructed employees to ignore signs of money laundering and repatriation of funds, said a bank insider.

Failing to properly report the transfers, not only permitted the bank to increase profits, but also allowed tens of million of dollars in drug money to be funneled across the border.

In 2011, George Martin, a former compliance department manager at Rabobank in Arroyo Grande, met with a CalCoastNews reporter to discuss his concerns, which he said were off the record while he looked for a new job. At the time, Martin had a family member who was undergoing medical treatments at a hospital in San Fransisco and he had concerns about his ability to earn a living and provide healthcare for his family, Martin said.

A few months later, Martin told a federal official about his concerns, Martin said.

In 2015, CalCoastNews exclusively reported that federal law enforcement agencies were investigating Rabobank over questions about whether the bank overlooked signs of money laundering by customers with connections to Mexican drug cartels. Investigators were also focused on the bank’s Financial Intelligence Unit’s Manager Stephen Byron and the bank’s former chief compliance officer Laura Akahoshi, a bank insider said.

On Dec. 14, 2017, Martin entered into a deferred prosecution agreement with the U.S. Attorney’s Office in San Diego. As long as Martin continues to cooperate with the investigation into Rabobank and several high-ranking bank employees, he will not be prosecuted with aiding and abetting violations of the Bank Secrecy Act.

A few weeks after Martin signed his agreement, Rabobank announced to shareholders it had set aside $374 million in anticipation of settling with the federal government and pleading guilty to withholding information from the U.S. Department of Treasury.

At this time, no bank employees have been indicted for failing to report money laundering for several Mexican drug cartels.