What is the Kleptocracy Asset Recovery Rewards Program?
Foreign public corruption can distort U.S. markets, taint the U.S. financial system, erode public trust in government institutions, and violate U.S. law. Congress created the Kleptocracy Asset Recovery Rewards Program to help the U.S. government combat foreign government corruption and aid in the United States’ effort to identify and recover stolen assets, forfeit proceeds of corruption, and return stolen assets to the country affected by the corruption.
The program was established by Congress as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. No. 116-283 and is managed by the Department of the Treasury’s Office of Terrorism and Financial Intelligence in close coordination with the Department of Justice and U.S. federal law enforcement agencies. According to the Department of Treasury, the program serves as a “force-multiplier for existing reward programs targeted at a variety of illicit finance threats.”
What are the rewards under the Kleptocracy Asset Recovery Rewards program?
Under the Kleptocracy Asset Recovery Rewards Program awards can reach a maximum of $5 million for information leading to the restraint or seizure, forfeiture, or repatriation of stolen assets. The stolen assets must be linked to an account at a U.S. financial institution or a U.S. branch of a foreign financial institution that comes within the possession or control of any U.S. individual. The Secretary of the Treasury may determine a case merits an award that exceeds $5 million. The Secretary must then personally authorize the greater amount and notify Congress of the determination.
Rewards will be based on multiple factors, including whether the information was previously known to investigative bodies, the risk assumed by the informant, and the significance of the information provided in leading to a successful restraint or seizure, forfeiture, or repatriation of the assets.
To be eligible for consideration of a reward, individuals must submit information under penalty of perjury. Individuals who knowingly provide false information may be referred to law enforcement.
Who is eligible under the Kleptocracy Asset Recovery Rewards program?
Most people are eligible under the program. However, the program does limit eligibility and reward payments for certain individuals:
- Employees of foreign, U.S. federal, state, or local governments who furnish information obtained as part of someone’s official duties are ineligible for a reward under the Kleptocracy Asset Recovery Rewards Program
- People involved in the misconduct are subject to a mandatory reduction of any reward and might even be denied a reward under the Kleptocracy Asset Recovery Rewards Program, at the Secretary of the Treasury’s discretion
- Any potential reward recipient convicted of criminal conduct arising from their involvement in the underlying corruption shall be denied a reward. Treasury may also seek to recover any reward already paid under the Kleptocracy Asset Recovery Rewards Program.
Can I remain confidential as a Kleptocracy Asset Recovery whistleblower?
Yes. The Department of the Treasury is required to keep confidential the information, as well as the identity of the individual who supplied the information, and any money paid out by the Kleptocracy Asset Recovery Rewards Program. However, there may be instances where some information relating to the source of the information may have to be disclosed, for example when a matter goes to trial and witness testimony is required, or where the information provided may itself make it possible to identify the source.
What are considered “stolen assets” under the Kleptocracy Asset Recovery program?
“Stolen assets,” means financial assets within the jurisdiction of the U.S. constituting, derived from, or traceable to, any proceeds obtained directly or indirectly from foreign government corruption. Financial assets are defined as “funds, investments, or ownership interests, that, after January 1, 2021, come within the U.S. or that come within the possession or control of any U.S. person.”
Russian Elites, Proxies & Oligarchs Task Force
A key focus of the Kleptocracy Asset Recovery Rewards Program involves assets linked to corruption associated with the government of the Russian Federation. The U.S. government, alongside international partners, has taken significant steps to identify and seize these assets through coordinated efforts.
In March 2022, the U.S. Department of the Treasury and the Department of Justice established the Russian Elites, Proxies, and Oligarchs (REPO) Task Force in response to Russia’s invasion of Ukraine. The task force’s mission is to freeze and seize assets linked to Russian oligarchs and individuals acting as proxies for corrupt Russian officials. The collaboration between the U.S. government and its international partners focuses on assets that are:
- Held in accounts at U.S. financial institutions, including U.S. branches of foreign financial institutions;
- Brought into the United States; or
- Held by any U.S. person or under their control.
The REPO Task Force specifically targets the wealth of high-profile Russian elites by freezing their assets worldwide. The U.S. government has identified 28 key Russian individuals and is actively seeking information regarding their hidden assets.
To aid in these efforts, the Financial Crimes Enforcement Network (FinCEN) has issued an advisory outlining how Russian oligarchs are attempting to conceal their wealth. Common methods include using real estate, luxury goods, and other high-value assets such as artwork to obscure the origins of their funds and evade detection.
This ongoing initiative is a critical part of the broader Kleptocracy Asset Recovery Rewards Program, demonstrating the global reach and impact of U.S. efforts to combat foreign corruption. By offering financial rewards to individuals who provide information that leads to the recovery of stolen assets, the program encourages whistleblowers to come forward and play an essential role in fighting kleptocracy on an international scale.
For more information on President Biden’s proposals to hold Russian oligarchs accountable and FinCEN’s advisory on kleptocracy and foreign public corruption, please see the following resources:
- President Biden’s Comprehensive Proposal to Hold Russian Oligarchs and Elites Accountable
- FinCEN Advisory: Kleptocracy and Foreign Public Corruption
Whistleblower Programs: SEC, CFTC, IRS & Kleptocracy Asset Recovery
In addition to the Kleptocracy Asset Recovery Rewards Program, whistleblowers may also be eligible for awards under the SEC, CFTC, and IRS whistleblower programs. These programs, particularly the SEC Whistleblower Program, complement the Kleptocracy Asset Recovery Rewards Program by offering financial incentives for reporting violations of the Foreign Corrupt Practices Act (FCPA). The FCPA is a powerful anti-bribery law that prohibits U.S. companies and individuals from offering payments or inducements to foreign officials to influence business decisions.
The SEC Whistleblower Program incentivizes individuals to report securities violations, including FCPA violations and has been highly successful in recovering nearly $5 billion in monetary sanctions through whistleblower tips since its inception. Whistleblowers are eligible to receive between 10% and 30% of monetary sanctions exceeding $1 million, making the SEC program an essential tool for uncovering corruption tied to securities fraud and bribery.
While the SEC and CFTC whistleblower programs focus on violations within their regulatory jurisdiction, the Kleptocracy Asset Recovery Rewards Program expands beyond these areas by targeting assets stolen through foreign corruption that may not fall under the scope of the SEC or CFTC. For example, the Treasury Department has welcomed information on stolen assets linked to FCPA violations by Odebrecht S.A. and Braskem S.A., Brazilian companies involved in a massive bribery scheme.
Additionally, the IRS Whistleblower Program offers rewards for reporting violations of U.S. tax laws, including those linked to kleptocrats and foreign officials who may be evading taxes through hidden or laundered assets. Whistleblowers who provide valuable information to the IRS about such violations may also be eligible for rewards.
These programs work together to create a comprehensive system for identifying and recovering assets linked to corruption and foreign bribery. Whether the information involves securities violations, tax evasion, or foreign corruption, whistleblowers can potentially receive rewards under multiple programs depending on the nature of the violation.
Furthermore, the Kleptocracy Asset Recovery Rewards Program intersects with the Anti-Money Laundering (AML) Whistleblower Program. FinCEN offers rewards for information related to the evasion of U.S. sanctions laws, which is particularly relevant given the economic sanctions imposed on many oligarchs and kleptocrats. Whistleblowers who uncover information about financial institutions aiding in sanctions evasion or failing to comply with sanctions screening may also be eligible for rewards under the AML program.
By targeting a broad spectrum of corrupt activities—from bribery and securities fraud to tax evasion and money laundering—these programs provide powerful incentives for individuals to report wrongdoing and assist in recovering stolen assets, particularly those linked to foreign corruption.
Phillips & Cohen’s attorneys will review your Kleptocracy Asset Recovery case confidentially
If you are aware of information that might lead to the restraint or seizure, forfeiture, or repatriation of stolen assets under the Kleptocracy Asset Recovery Rewards Program and would like to discuss your case with experienced whistleblower lawyers, please contact Phillips & Cohen for a free, confidential review of your matter.