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Rabobank To Pay $369 Million In Money-Laundering Case

February 8, 2018 1:38 p.m.

Rabobank To Pay $369 Million In Money-Laundering Case


Elliot Spagat, reporter, Associated Press

Related Story: Rabobank To Pay $369 Million In Money-Laundering Case


This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

>> Our top story on midday addition, it is one of the largest settlements in the United States over laundering Mexican drug money. The California branch of the Dutch lender, rebel bank pleaded guilty to a felony yesterday. They admitted they allowed $369 million in drug money in its branches in Calexico and the Cathay. Joining me is Elliott's baguette, a reporter has been who has been covering the story.
>> The bank is not denying it laundered money from drug trafficking. That is not what they pleaded guilty to. Why don't you tell us about that.
>> They pleaded guilty to a cover-up in 2013. These proceeds, at least $369 million went through the bank between 2009 and 2012. In 2013 the Treasury Department was doing an annual review and started asking questions. At least three unnamed executives identified in the court documents is as executives participated in the cover-up. The bank pleaded guilty to that.
>> Do we know who was depositing all this money?
>> Organized crime, drug trafficking, what they were doing is pretty simple. They turned a blind eye through the branches. One example is that they had a list of special customers who were free of that despite suspicious activity. One customer funneled $100 million through the bank. He was on a leave him alone was. It was a massive amount going through these branches with no effort to contact authorities.
>> Some issues that seem to be going on here is, first of all, they had very few people who could have oversight of what was going on. Apparently they were receiving alert that may have been ignored.
>> There was the mention of an overwhelmed staff. I think it was three compliance officers who had responsibility for overseeing 2300 alerts per month. This was their internal flagging system to flag suspicious activity.
>> This is not the first time the bank of gotten in trouble with regulators over this very same issue. Tells about that.
>> Right. In 2006 to 2008, they got into trouble and reach a settlement. Interestingly, executive a was working for the Treasury Department at the time. He jumped over to this bank and the same practices continued.
>> Yesterday, they entered their plea. What did the bank have to say about this, if anything?
>> They said we are happy to put this behind us and we have improved our internal controls. They are scot-free right now as long as they abide by terms of the plea agreement. Significantly, that requires them to cooperate in the investigation. There may be more to come. It will be against individual executives.
>> This is a felony. Is anybody going to jail?
>> Not yet. One person turned. He was a key person in the case overseeing the anti-money laundering efforts. He has agreed to cooperate with officials. He did not plead guilty. He got deferred prosecution it will be put off for two years. The bank will cooperate. We will see. I think these executives will probably have to be answering some questions.
>> Is there a reason why there was an influx in activity in 2010?
>> Anti-money laundering measures were introduced. That put strict limits on how much cash could be deposited in Mexican banks. There was a flood of deposits. The number of accounts increased by more than 20% after this. The bank knew it was likely to be drug money.
>> This was a very big settlement. Put it in context. Was this the biggest we have ever seen quick
>> The biggest is HSBC, a British bank which settled for $1.9 billion in 2012. The other one is Wachovia in 2010 settled for $160 million. This is one of the biggest.
>> So this branch, it seems like they have been bad actors for a well. Do we have any indication that will stop or that they will be watched over a little bit more carefully quick
>> The future is hard to predict. They have been under special supervision since 2013. A press release yesterday said that oversight had been lifted. The federal government in a plea agreement, did praise them for improvements since all this happen. We will see.
>> Elliott is a reported with -- reporter with the associated press. Thank you very much.
>> Thank you.