Anti-Money Laundering Whistleblower Program

On January 1, 2021, Congress enacted the Anti-Money Laundering Act (AMLA), a comprehensive reform of anti-money laundering laws. Recognizing the success of whistleblower incentives in combatting fraud against the government, securities fraud, tax fraud, commodities fraud, and other types of fraud, Congress included in the AMLA a provision that incentivizes whistleblowers to report violations of the anti-money laundering laws to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Eligibility for Anti-Money Laundering Whistleblower Reward Section 6314 of the AMLA incentivizes whistleblowers to report money laundering by requiring Treasury to pay an award of up to 30 percent of collected monetary sanctions that it recovers in a judicial or administrative action brought under the Bank Secrecy Act that results in sanctions exceeding $1,000,000. To be eligible for an award, the whistleblower must voluntarily provide original information to their employer, Treasury, or the Department of Justice Whistleblowers abroad who are not U.S. citizens would be eligible for awards where the BSA violations they report are within the jurisdiction of U.S. law enforcement. In contrast to the Dodd-Frank Act’s award eligibility rules, the AMLA whistleblower reward law does not impose limitations on award eligibility for whistleblowers who gain information through the performance of an audit of financial statements. And it permits compliance personnel to obtain whistleblower awards in that the term “whistleblower” includes an individual who provides information relating to a violation “including as part of the job duties of the individual. Fines for money laundering can be substantial. In February 2018, U.S. Bancorp/U.S. Bank paid $613 million in fines and forfeitures to settle charges that it failed to maintain adequate safeguards against money laundering. In particular, U.S. Bancorp/U.S. Bank limited the number of transactions its systems would flag as suspicious and processed Western Union transactions for non-customers Submitting a Whistleblower Tip to FinCEN Anonymously If represented by an attorney, an AML whistleblower may submit a tip anonymously to FinCEN. Even at the time of a reward, a whistleblower’s identity is not made available to the public. In addition, the AMLA requires Treasury and Justice to take steps to protect the confidentiality of whistleblower submissions. Any officer or employee of either agency must not disclose information provided by a whistleblower “which could reasonably be expected to reveal the identity of a whistleblower,” except where the agency is required to disclose the information to a defendant in a public proceeding instituted by the agency and in accordance with the Privacy Act. An experienced AML whistleblower lawyer will be able to skillfully guide a whistleblower through the process, maximizing the likelihood that the whistleblower’s identity is not revealed to unauthorized parties. Monetary Sanctions Qualifying for an Award The monetary sanctions collected in any judicial or administrative action that can qualify for an AMLA whistleblower award include any monies, including penalties, disgorgement, and interest ordered to be paid, but excludes (i) forfeiture; (ii) restitution; and (iii) any victim compensation payment. An AMLA whistleblower may also qualify for a “related action” award, which is any judicial or administrative action brought by (i) any appropriate federal authority; (ii) a state attorney general in connection with any criminal investigation; or (iii) any appropriate state regulatory authority, when the action is based on the original information provided by the whistleblower and led to the successful enforcement of the action by Treasury or Justice. Determining the Amount of an AMLA Whistleblower Award To determine the amount of an AMLA whistleblower award, Treasury will consider: the significance of the information provided by the whistleblower to the success of the covered judicial or administrative action; the degree of assistance provided by the whistleblower and any legal representative; the programmatic interest of Treasury in deterring the particular violations that the whistleblower disclosed; and additional relevant factors that Treasury will promulgate, which will likely echo the factors that the SEC employs to determine the amount of an SEC whistleblower award. Protecting Anti-Money Laundering Whistleblowers Against Retaliation Section 6314(g) of the AMLA creates a private right of action for whistleblowers who have suffered retaliation for disclosing potential BSA violations to Treasury or Justice, a federal regulatory or law enforcement agency, Congress, or a person with supervisory authority over the whistleblower. It also protects a whistleblower assisting in any investigation or judicial or administrative action of Treasury or Justice based on or related to the information that the whistleblower disclosed to the government. In contrast to Dodd-Frank’s whistleblower protection provision, AMLA-protected whistleblowing does not require a threshold showing that the whistleblower reported a potential BSA violation to the appropriate regulatory agency. Instead, internal whistleblowing alone is protected. Moreover, the whistleblower need not meet the AMLA requirements for award eligibility to be protected under the anti-retaliation provision. Similar to the SOX whistleblower protection law, the AMLA prohibits a wide range of retaliatory acts, including directly or indirectly discharging, demoting, suspending, threatening, blacklisting, harassing, or in any other manner discriminating against a whistleblower in the terms and conditions of employment due to the employee’s protected whistleblowing. The causation standard in an AMLA retaliation claim is favorable to the whistleblower. To prevail, the whistleblower need only demonstrate that their protected whistleblowing was a contributing factor in the unfavorable personnel action taken by their employer. Once the whistleblower demonstrates contributing factor causation, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same adverse action in the absence of the whistleblower engaging in protected conduct. A prevailing AMLA whistleblower is entitled to reinstatement, double back pay with interest, uncapped compensatory damages, reasonable attorney fees, any other appropriate remedy with respect to the conduct that is the subject of the action. AMLA retaliation claims must be filed initially with the Occupational Safety and Health Administration, and 180 days after filing, the whistleblower can remove the claim to federal court and try the case before a jury. This new law will afford robust protection to whistleblowers disclosing money laundering, but it will not apply to employees at credit unions and FDIC-insured depository institutions. Those employees can bring retaliation claims under weaker anti-retaliation laws that protect only whistleblowing to the government (not internal whistleblowing), impose a higher burden of causation, and provide anemic remedies. See 12 U.S.C. § 1831j; 12 U.S.C. §§ 1790b, 1790c. For the AMLA whistleblower program to succeed, Congress should eliminate this exception to the scope of AMLA whistleblower protection. Resources About the Anti-Money Laundering Whistleblower Reward Law Bank Secrecy Act Bank Secrecy Act Regulations Frequently Asked Questions Regarding the FinCEN Suspicious Activity Report (SAR) Answers to Frequently Asked Questions Bank Secrecy Act (BSA) Questions FinCEN Files investigation FACT Coalition: Landmark Bill Ending Anonymous U.S. Companies Is Enacted