Anti-Money Laundering Whistleblower Program (AML Whistleblower)

In December 2022, the president signed into law the Anti-Money Laundering Whistleblower Improvement Act (the Act). Addressing the weaknesses in the Anti-Money Laundering Act of 2020 (AML), the Act aligns the anti-money laundering whistleblower programs with successful programs run by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

But the revised law also broadens existing legislation. In light of the sanctions imposed against certain entities implicated in the Russian war on Ukraine, the Act creates new abilities for whistleblowers to report both U.S. entities and foreign actors trying to circumvent those sanctions and evade other U.S. finance-related laws.

One key takeaway? The Act has created new opportunities, protection, and compensation for whistleblowers around the globe.

The new Act offers an expanded iteration of AML, which focused on whistleblowers who were reporting violations of the Bank Secrecy Act, such as:

• Failure to fulfill specific compliance requirements
• Failure to implement a larger compliance program
• Failure to supervise accounts, especially when there is suspicious activity

The 2022 Act allows whistleblowers to report violations of other laws as well, including:

• The International Emergency Economic Powers Act
• The Foreign Narcotics Kingpin Designation Act
• Certain provisions within the Trading with the Enemy Act

Thus, while the earlier version of the law was focused on the prosecution of banking organizations, the Act’s extended reach encourages anyone with tips relating to violations by any U.S. company required to comply with sanctions administered by the Department of Treasury’s Office of Foreign Assets to speak up.

Whistleblowers can come from U.S. companies with global supply chains, cryptocurrency exchanges, payment processors, and more. And the law expressly seeks information relating to Russian oligarchs, drug traffickers, and terrorist organizations who are hiding their assets.

The Act clarifies that citizens from anywhere in the world can become AML whistleblowers. Chinese or Russian citizens are as eligible for an award as an American. Additionally, whistleblowers from outside the U.S. are entitled to make confidential reports, and are equally protected from related retaliation.

While the Act was modeled after the Dodd-Frank Act legislation that created the SEC whistleblower program, the two laws have an important difference when it comes to who is eligible for an award.

Under Dodd-Frank, SEC whistleblowers are barred from receiving an award if they gained their information while auditing financial statements required under the securities laws, or if they already had a requirement to submit that information to the Commission but failed to do so.

AML whistleblowers are not limited by these requirements. The AML states that employees are still eligible for an award if they learned of the violation “as part of the[ir] job duties.”

In other words, although compliance officials are barred from SEC awards, they are not barred from AML awards. On the contrary, the law was drafted to specifically encourage people working in compliance to come forward when they discover money laundering or sanctions violations.

While the AML whistleblowing program authorized a maximum award of up to 30% of any monetary penalties recovered by the U.S. Treasury in excess of $1 million, it did not set a minimum requirement. This meant a whistleblower could submit a successful tip but still walk away empty-handed.

Under the revised law, a successful whistleblower will receive at least ten percent of the penalties—unless they are eligible for an even greater amount through another whistleblower program.

Now, whistleblowers with tips about money laundering stand to reap enormous payouts. As Bloomberg Law recently pointed out, the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) fined USAA Federal Savings Bank $140 million for failing to review thousands of cases the bank had concluded were suspicious. If a whistleblower had tipped FinCEN off to this violation, they could have received an award of $42 million.

Another enticement for whistleblowers? The Act establishes a $300 million Financial Integrity Fund—consisting of fines paid to the U.S. government—to pay for whistleblower awards. Whistleblowers should feel confident that the government can pay even large awards without the need for legislative action.

Law enforcement officials are seldom able to identify domestic money laundering activity without whistleblower tips. Identifying it in international cases is even more difficult because more of the activity takes place outside their jurisdiction.

Domestically and internationally, then, whistleblowers provide an essential service at every stage of the case, from bringing violations to the attention of law enforcement to the investigation and prosecution of the case.

Successful whistleblowers bring evidence that prosecutors don’t know about or can’t get access to. The ideal case, prosecutors say, is when the whistleblower is able to produce useful documents such as corporate organizational documents, contracts, bills of sale, bank statements, and ledgers. Even a contact list or email may help prosecutors identify the parties involved in laundering money or violating Russian sanctions.

But whistleblowers’ value goes beyond collecting documents. Their analysis and insider knowledge of operations can be invaluable to the prosecution of a case. For example, an informed whistleblower can explain what seemingly-innocuous accounting statements actually reveal—where the money is going, the difference between the public-facing company and the criminal enterprise, and the criminal enterprise’s key operations.

Anyone thinking about taking action as a whistleblower should consult with an attorney for at least two significant reasons.

First, an attorney can ensure the whistleblower’s filing is compelling to prosecutors. They’ll make sure an application is authoritative, important, and trustworthy.

The quality of a whistleblowing filing matters. Applications should include legal analysis that shows the whistleblower is bringing forward evidence that helps to prove the required elements necessary for a criminal conviction. A compelling application will also explain why these tips merit prosecutorial resources (e.g., it puts the allegations in the context of institutional priorities).

Second, attorneys specializing in whistleblowing cases know how to protect their clients. Your attorney can conceal your identity during at least the initial filing stages, for example. And, if a whistleblower is concerned they may be implicated in the wrongdoing they’re reporting, their attorney can help assess their potential liability. A whistleblower attorney can help you strategize the best way of working with law enforcement to minimize liability and maximize the award.

Because whistleblowing cases can be complicated—especially those relating to international actors—the sooner a whistleblower retains counsel, the stronger their case will likely be.

AML whistleblowers should not be submitting a pile of evidence that will take prosecutors years to slog through while law enforcement entities are still setting up their investigation protocols and prosecution strategies. Instead, they should be providing strong, actionable tips as early in the investigation as possible. An early submission may even become the model for FinCEN’s investigatory approach.

And in cases involving the violation of Russian sanctions—a chief catalyst for AML—prosecutors want (and need) intelligence they can pursue immediately.

The prospect of hefty legal fees can cause some whistleblowers to hesitate when it comes seeking counsel. They shouldn’t. Whistleblowers concerned about potential legal costs should look for representation on a contingency basis, in which their attorneys only get paid if they receive an award. Contingency relieves whistleblowers of the financial obstacles to legal representation, allows them to bring on counsel earlier in the process, and incentivizes their representation to obtain the largest possible award for their client.

This is why the Silver Law Group and the Law Firm of David Chase have created a strategic alliance to represent whistleblowers like you.

With years of experience representing whistleblowers, coupled with an SEC Enforcement lawyer on our team, we have an in-depth understanding of the AML, CFTC, and SEC Whistleblower Programs. We understand what the agencies are looking for. We can help you submit a tip that is more likely to result in a successful covered action. We are here to assist whistleblowers to maximize their opportunity to receive a financial bounty. For a free, confidential consultation, contact us by email or call us today at (800) 975-4345.