Ex-Rabobank CEO fined $20K for withholding AML report

John Ryan, CEO of Rabobank from September 2012 until December 2015, caused a material audit report to not be submitted to the OCC while it was carrying out an investigation at the bank in 2013, the agency alleged. In December 2013, Rabobank agreed to a consent order with the OCC regarding deficiencies in its BSA/anti-money laundering (AML) compliance program. The bank would be fined $50 million by the regulator in 2018 regarding the latter’s findings during that probe.

Ryan’s settlement with the OCC was reached July 28 and announced Thursday.

The details: Rabobank in February 2018 pleaded guilty to “conspiring with several former executives to defraud the United States by unlawfully impeding the OCC’s ability to regulate the bank and to obstruct an examination by the OCC of its operations throughout California, including its Calexico and Tecate bank branches,” as part of a $369 million enforcement action by the Department of Justice. Ryan was not named in the guilty plea, though former Rabobank Vice President George Martin was identified after admitting his role in the scheme in December 2017.

Deficiencies in Rabobank’s AML program “allowed hundreds of millions of dollars in untraceable cash, sourced from Mexico and elsewhere, to be deposited into its rural bank branches in Imperial County, and transferred via wire transfers, checks, and cash transactions, without proper notification to federal regulators as required by law,” the Justice Department stated. The bank’s executives at the time attempted to conceal this information to avoid fines similar to ones it received in 2006 and 2008 for “nearly identical failures,” according to the agency.

The OCC’s $50 million penalty was assessed in coordination with the Justice Department’s action. The OCC further faulted the bank for weaknesses in its customer due diligence and enhanced due diligence processes and failing to document more than $233 million in previously unreported suspicious activity.

Through his alleged misconduct, Ryan “engaged in violations of law and unsafe or unsound practices and breached his fiduciary duty to the bank, which caused the bank to suffer financial loss or other damage and demonstrated continuing disregard for the safety or soundness of the bank,” the OCC said in last month’s consent order.

Ryan neither admitted nor denied the regulator’s findings. His fine is less than the $50,000 penalty the OCC previously assessed against Laura Akahoshi, Rabobank’s former chief compliance officer, for her alleged role in the scheme.

Rabobank’s AML program continues to face regulator scrutiny. The Dutch Central Bank in October 2021 warned Rabobank regarding deficiencies in its compliance with the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act, which could lead to a future enforcement action if not remedied.