What is the Anti-Money Laundering Whistleblower Program?
The anti-money laundering whistleblower program allows whistleblowers to report money-laundering violations and sanctions evasion through a government program that offers rewards, protections against job retaliation and confidentiality. Whistleblowers may report money laundering and sanction evasion anonymously, if they do so through an attorney.
Congress created the anti-money laundering (AML) whistleblower program as part of the fiscal 2021 National Defense Authorization Act that was enacted in January 2021.
The Defense authorization contains provisions to overhaul anti-money laundering laws in addition to establishing a new AML whistleblower program.
The AML whistleblower program has the potential to provide a big boost to anti-money laundering and sanction evasion enforcement. Congress created similar whistleblower programs at the Securities and Exchange Commission and the Commodity Futures Trading Commission as part of the Dodd-Frank Act in 2010, and now whistleblowers are a key part of their enforcement efforts.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) administers the anti-money laundering whistleblower program.
Additionally in 2022, the Department of Treasury launched theKleptocracy Asset Recovery Rewards Program, which works alongside the Anti-Money Laundering Act (AMLA) to offer awards of up to $5 million for whistleblowers who supply information that results in the seizure, restraint, or forfeiture of assets associated with corruption by foreign governments.
As of January 1, 2024, FinCEN enacted a new rule requiring companies to report their beneficial owners, and that violations of these new requirements can be reported under the AML Whistleblower Law.
The Anti-Money Laundering (AML) Whistleblower Improvement Act of 2022
The Anti-Money Laundering Whistleblower Improvement Act was an amendment to the Anti-Money Laundering Act (AMLA) aimed at strengthening incentives and protections for whistleblowers who reported original information leading to successful AML enforcement actions and monetary sanctions exceeding $1 million. This new Act expanded the scope of the AMLA, covering violations of financial management rules for executive agencies, sanctions on foreign nations/entities/individuals deemed enemies of the United States, and sanctions on foreign narcotics traffickers. Additionally, the Act introduces a funding structure and minimum awards for whistleblowers who provide successful tips.
As a result of these changes, employers within the financial sector, those with international operations in areas subject to U.S. sanctions, or those responsible for compliance with the covered laws may receive an increased number of AML whistleblower reports from their employees. The AMLA has transnational reach, allowing international citizens to report violations if they pertain to financial or trade relations with the U.S.
The Anti-Money Laundering Act also sets up a revolving fund solely intended for compensating whistleblowers under the statute of limitations for money laundering, which will be financed by monetary penalties collected in covered actions and the fund’s investment earnings. This is a departure from the previous system where the awards were subject to the congressional appropriations process. This alteration promotes greater stability and assurance in the disbursement of awards to whistleblowers who have succeeded in their claims.
Enforcement of Anti-Money Laundering & Sanctions Laws
In the United States, the enforcement of Anti-Money Laundering (AML) and Sanctions Laws involves several departments and agencies, depending on the specific nature of the law and the type of financial activity being regulated. FinCEN, part of the Department of the Treasury, is tasked with overseeing the Anti-Money Laundering Act (AMLA) and enforcing the Bank Secrecy Act (BSA), while the Office of Foreign Assets Control (OFAC) manages the enforcement of economic and trade sanctions laws. These laws range from asset freezes to trade restrictions to enable foreign policy and national security goals.
Rewards For Whistleblowers Reporting Money Laundering and Sanction Evasions
Whistleblowers who report violations of the Anti-Money Laundering Act can receive rewards between 10-30% of the monetary enforcement sanctions collected in a case, depending on the significance of the information and the degree of assistance that the whistleblower and their attorney provided in the investigation and enforcement action.
What Qualifies as an AML Whistleblower Complaint?
Key points to keep in mind about the anti-money laundering whistleblower program, as laid out in the Defense authorization legislation:
- To qualify, a whistleblower must voluntarily provide new (original) information about specific money laundering schemes – either from first-hand evidence or through independent analysis.
- For a whistleblower to be eligible for a reward, monetary sanctions (penalties, disgorgement and interest) from the enforcement action based on the whistleblower’s information must exceed $1 million.
- The government may not disclose the identity of the whistleblower or any information that could reasonably be expected to reveal the whistleblower’s identity unless required to so in connection with a court proceeding.
- Whistleblowers may submit their information anonymously to the Treasury Department if they do so through an attorney. However, they must reveal their identity to the department before they are paid an award.
- Whistleblowers who are convicted of a criminal violation related to the illegal conduct they reported are not eligible for rewards.
Protections for AML & Sanctions Whistleblowers
The identities of whistleblowers who report money laundering and sanctions violations through the AML program are kept confidential.
Whistleblowers may report money laundering anonymously if they do so through counsel. However, to receive a reward after enforcement actions in a case have ended and monetary sanctions have been collected, a whistleblower must reveal their identity at that time.
In addition, the law prohibits employers from retaliating against AML whistleblowers, specifically stating that employers cannot “directly or indirectly, discharge, demote, suspend, threaten, blacklist, harass, or in any other manner discriminate against a whistleblower in the terms and conditions of employment or post-employment.”
Those who suffer retaliation from reporting money laundering and sanctions violations are entitled to reinstatement, two times the amount of back pay plus compensatory damages.
How does the Anti-Money Laundering Whistleblower Program Differ from the SEC and CFTC Whistleblower Programs?
The anti-money laundering whistleblower program differs from the SEC and CFTC whistleblower programs in certain significant ways.
The AML whistleblower program guarantees a minimum reward of 10% of the monetary enforcement sanctions collected in a case unless the money laundering whistleblower is eligible for payment through another whistleblower award program.
In contrast, the SEC is required to issue a whistleblower reward that ranges from 10% to 30% of the amount collected as a result of the whistleblower’s information and assistance. A guaranteed minimum award has been a critical factor for successful whistleblower programs.
AML whistleblowers who suffer employment retaliation would have to file a complaint with the Department of Labor first rather than go directly to court. If the department fails to issue a final decision in 180 days, the whistleblower then could file a complaint in federal district court.
The sections of the Defense Authorization Act for Fiscal Year 2021 that created the anti-money laundering whistleblower program are posted here.
Phillips & Cohen Attorneys Protect AML Whistleblowers
If you are aware of money laundering and are considering becoming a whistleblower, contact Phillips & Cohen for a free, confidential review of your matter by experienced and successful financial whistleblower attorneys.