SAN DIEGO – Dutch lender Rabobank’s California subsidiary is scheduled to enter a plea Wednesday in a long-running investigation that led to allegations the bank was used to launder millions of dollars in Mexican drug money.
Rabobank said last month that it set aside about 310 million euros ($384 million) to settle and that the subsidiary, Rabobank National Association, would likely plead guilty to a charge that employees hid information from regulators nearly five years ago. It would be one of the largest U.S. settlements involving Mexican money laundering, though still only a fraction of the $1.9 billion that Britain’s HSBC agreed to pay in 2012.
A calendar for U.S. Magistrate Judge Jill Burkhardt in San Diego says an arraignment and plea were scheduled Wednesday. No additional information was publicly available.
Representatives of the Rabobank subsidiary did not respond to a phone message and emails seeking comment.
While charges against the bank have not been made public, former compliance officer George M. Martin agreed to cooperate with authorities in December under a deal that delays his prosecution for two years.
Martin, a vice president and anti-money laundering investigations manager at the subsidiary, 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 their knowledge. He admitted that he and others allowed millions of dollars to get through without adequate scrutiny.
Martin and others allegedly turned a blind eye to a Mexican client who made more than $10 million in suspicious transactions, despite being warned about the client, because a branch in the border town of Calexico wanted more business from them. Authorities seized the account in 2011 on suspicion it was being used to move millions of dollars in drug proceeds.
Martin and others allegedly failed to alert authorities to suspicious activity at branches in Calexico and Tecate, another town on the border with Mexico. In 2009 and 2010, employees allegedly allowed a Mexican client to withdraw nearly $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 allegedly 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.