United States: Alberts Comments On OCC Charges Against Former Compliance Officer (Video)

On May 17, 2018 the Office of the Comptroller of the Currency made public a Notice of Charges filed against Rabobank’s former Chief Compliance Officer, Laura Akahoshi. The central allegations against Ms. Akahoshi are that she failed to comply with the OCC examiners’ requests and concealed a draft audit report that found deficiencies in Rabobank’s BSA/AML program.

Background

Ms. Akahoshi was a former OCC examiner who became the Chief Compliance Officer of Rabobank in 2008. By 2012, she had taken a different position, as the Compliance Manager of Rabobank International in the Netherlands, but in February 2013, Ms. Akahoshi was called back to the United States to assist Rabobank in responding to an inquiry from the OCC.

Shortly before Ms. Akahoshi’s return, Rabobank received a draft report prepared by the audit firm Crowe Horwath, which described deficiencies in Rabobank’s BSA/AML compliance program. The OCC alleged that on March 9, 2013, an electronic copy of a version of the Crowe Report was forwarded to Ms. Akahoshi.

During March 2013, Ms. Akahoshi assisted Rabobank in drafting a response that disputed the OCC’s preliminary conclusions regarding Rabobank’s BSA/AML compliance program. Rabobank claimed that the OCC’s preliminary findings were based on incomplete and inaccurate information and that, upon closer examination, the OCC would find no deficiency in any of the four pillars of Rabobank’s compliance program. Rabobank’s response was sent to the OCC on March 15, 2013.

During this period, Ms. Akahoshi became the Acting Chief Compliance Officer. The previous Chief Compliance Officer informed the OCC of the existence of the Crowe Report.

The OCC then made several requests to Rabobank for the Crowe Report, including any “preliminary or partial” report. Ms. Akahoshi provided a number of responses that indicated there was no final report and referenced a PowerPoint presentation Crowe Horwath made, which was not provided to Rabobank. After several rounds of communications, when the Crowe Report was finally provided to the OCC, Ms. Akahoshi included a cover letter that again indicated Rabobank was not in possession of the PowerPoint presentation and that the Crowe Report was sent to the previous Chief Compliance Officer and shared with two other Bank employees.

In February 2018, Rabobank pled guilty to conspiracy to obstruct an OCC examination in violation of federal criminal law, paid a $50 million civil money penalty and agreed to forfeit over $368 million. The OCC alleges that the plea, payment of penalties and forfeiture were a result of Ms. Akahoshi’s concealment of the Crowe Report.

The Alleged Violations and Penalties Sought

In its filed Notice of Charges, the OCC is seeking an order under 12 U.S.C. § 1818(e) prohibiting Ms. Akahoshi from participating in any manner in the conduct of the affairs of any FDIC-insured bank. The OCC also is seeking an order requiring Ms. Akahoshi to pay a civil money penalty of $50,000.

The OCC is basing its claims on two alleged violations of statutes, as well as the allegation that Ms. Akahoshi recklessly engaged in unsafe or unsound practices in conducting the affairs of Rabobank. The more significant allegedly violated statute is 18 U.S.C. § 1001, a criminal statute, which the OCC claims Ms. Akahoshi violated by “knowingly and willfully ma[king] materially false statements regarding the Bank’s possession of the Crowe Report” to the OCC. The second allegedly violated statute is 12 U.S.C. § 481, which grants the OCC powers to “make a thorough examination of all the affairs of [a national] bank and . . . to examine any of the officers, directors, employees, and agents” of the bank. The OCC claimed that Ms. Akahoshi interfered with the ability of the OCC to examine banks by concealing the Crowe Report.

Recommendations

This action appears to be an aggressive application of a criminal statute to a brief dispute over a bank regulator’s document request. By suggesting that a bank employee’s decision not to produce a document may be treated as a crime, the OCC is sending an intimidating message to bank employees.

In light of the OCC’s actions against Rabobank and Ms. Akahoshi, bank employees should be increasingly cautious in responding to requests for materials during the bank examination process. Special attention should be paid to statements made to the regulatory agencies that are subject to multiple interpretations or are ambiguous. If a bank regulator decides that statements made by a bank employee are misleading or false, this could result in criminal and civil penalties for not only the bank, but also the employee. Where appropriate, counsel should be consulted to ensure accurate and defensible disclosures.

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