Anti Money Laundering Whistleblower Program

Congress is considering a new whistleblower program to encourage individuals to report potential violations of the U.S. anti money laundering laws.

The program would bridge an enforcement gap left by federal banking whistleblower programs, as well as those whistleblower programs run by the Securities & Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), all of which have limited jurisdiction over potential money laundering violations.

A program that specifically targets violations of the Bank Secrecy Act would close that gap. Like other whistleblower programs, it would reward individuals who voluntarily provide original information to the Treasury Department or the Justice Department regarding possible money-laundering.

Whistleblower awards would be granted where the tip leads to a successful enforcement action and the monetary sanctions exceed $1 million. In those instances, a whistleblower can receive up to 30% of the monetary penalties collected by the government. Factors such as the significance of the information and the whistleblower’s level of assistance, would guide the award amount.

The program, if enacted, would expand existing regulations that provide the Treasury with discretion to pay either $150,000 or 25% of a fine or penalty (whichever is less) to a whistleblower – financial rewards that were possibly too meager to attract whistleblowers.

By comparison, the SEC whistleblower program has enabled the SEC to recover more than $2.7 billion while paying out roughly $731 million to whistleblowers – a great return on investment.

The new proposed whistleblower program is part of the National Defense Authorization Act for the 2021 fiscal year, which seeks to improve efforts in communications and oversight in combating money laundering and terrorism financing. The bill also includes beneficial-ownership provisions requiring U.S. companies to identify their true owners.

Some observers have noted potential weaknesses in the proposed bill, such as retaliation protection exemptions and the lack of a minimum whistleblower award. Hopefully these will be rectified before final passage.

Congress is expected to vote soon on the bill.  We’ll be closely watching.