Federal courthouse in downtown San Diego. Photo by Chris Stone

A federal judge in San Diego Friday ordered a California subsidiary of the Netherlands-based bank Rabobank to pay a $500,000 fine for conspiring to impede and obstruct its primary regulator by concealing deficiencies in its anti-money laundering program.

The half-million dollar criminal fine coupled with Rabobank’s forfeiture of nearly $369 million stands as the largest monetary penalty paid by a criminal defendant in the history of the Southern District of California, according to the U.S. Attorney’s Office.

Rabobank pleaded guilty in February.

In imposing sentence, U.S. District Judge Jeffrey Miller noted that Rabobank’s conduct essentially amounted to “stiff-arming” the Department of the Treasury’s Office of the Comptroller, and “completely failing in its responsibility to its customers and the nation.”

“Rabobank’s branches on the Mexican border processed hundreds of millions of dollars in suspicious transactions likely tied to international narcotics trafficking, organized crime and money laundering,” said Acting Assistant Attorney General John P. Cronan.

“Instead of filing reports that would have alerted law enforcement to the suspicious activity, as required by law, the bank looked the other way and then compounded its misconduct by conspiring to cover up its failures and deceiving its regulator,” Cronan said. “Today’s sentence and the related forfeiture demonstrate that the Department of Justice will use all the tools at our disposal to combat drug trafficking and trans-national crime, including prosecuting financial institutions that turn a blind eye to illicit proceeds moving through their  customers’ accounts.”

As a result of its compliance failures, Rabobank admitted that certain customer accounts were involved in not less than $368,701,259 in suspicious transactions that were either unreported or untimely reported to the Financial Crimes Enforcement Network, as required by the Bank Secrecy Act.

Those transactions along the southwest border included high-volume cash deposits and withdrawals, check transactions, electronic transfers and wire transfers that were consistent with illegal activity such as trade-based money laundering, bulk cash smuggling, structuring and the black market peso exchange, according to federal prosecutors.

–City News Service

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