Anti-Money Laundering and Sanctions Whistleblower Program

Whistleblowers can receive awards for reporting violations of the Bank Secrecy Act and sanctions laws

In 2021, the United States took a critical step for anti-money laundering (AML) enforcement by creating a long overdue AML whistleblower program.  The new whistleblower program, was passed as part of the Anti-Money Laundering Act of 2020 (AMLA), part of the National Defense Authorization Act (NDAA).  The new program is administered by the Department of Treasury and provides for mandatory awards to whistleblowers who bring forward information about violations of the Bank Secrecy Act (BSA), the primary AML enforcement law.  In 2022, the program became even stronger with amendments that opened up the program to whistleblowers with information related to sanctions violations.

Under the AML whistleblower program, a whistleblower can receive a reward of up to 30% of monetary sanctions over $1,000,000 the government imposes based on the information the whistleblower provides.

In addition, in 2022 the Department of Treasury launched the Kleptocracy Asset Recovery Rewards Program, which offers an award of up to $5 million for whistleblowers who provide information that leads to the seizure, restraint, or forfeiture of assets linked to foreign government corruption.

Current Status of the AML Whistleblower Program

The AML Whistleblower Program is now in effect.  When the AMLA was signed into law, the reward provisions became effective, without the need for implementing regulations.  Treasury is, however, likely to issue regulations and potentially other guidance clarifying the structure and process of the program.  In the meantime, the doors are open to whistleblowers.

Critically, the program covers wrongdoing prior to its creation.  A whistleblower with information about any violations of the BSA or sanctions laws that are within the statute of limitations for government enforcement actions can submit a claim under the AML Whistleblower Program.  That statute of limitations is six years for BSA civil actions under 31 U.S.C. § 5321(b) and five years for criminal penalties under 18 U.S.C § 3282(a).  The limitations period for sanctions violations are different and you should consult an attorney to ensure your claim is preserved.

Elements of a Bank Secrecy Act claim under the AML Whistleblower Program

The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is charged with administering the Bank Secrecy Act.  It has broad investigative powers and can bring enforcement actions seeking monetary penalties and other civil remedies through actions in federal court or administrative proceedings.  FinCEN regularly works with other federal regulators, including the SEC and CFTC, as well as with the Department of Justice, which can bring criminal, civil, and forfeiture actions for violation of AML rules.

A whistleblower may submit information about any possible violation of the BSA and its regulations that has occurred, is ongoing, or is about to occur. Violations may take the form of:

• The failure of a covered financial institution to have an effective overall compliance program;
• Failures with respect to specific compliance program components or “pillars”;
• Systemic and recurring noncompliance with BSA requirements.

U.S. AML laws cover a wide range of actors and activities, and they are not limited to U.S. companies.  Whether FinCEN and other enforcement agencies pursue BSA violations depends on a range of factors including the nature and seriousness of the violations; their impact on the financial system; the pervasiveness of wrongdoing within an entity; any history of similar violations; and, financial gain arising from the violations.

Elements of a sanctions violation claim under the AML Whistleblower Program

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is charged with administering the rules governing when and how companies and individuals do business with sanctioned entities and controls.  Violations of sanctions can lead to serious criminal and civil penalties, with OFAC working closely with other government agencies including the Department of Justice to ensure strict compliance with these laws.

American sanctions rules are not found in just one place.  The United States has multiple laws governing how sanctions operate.  The newly expanded AML program now allows whistleblowers with information related to violations of:

• International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.)
• Trading with the Enemy Act (50 U.S.C. § 4305, 4312)
• And the Foreign Narcotics Kingpin Designation Act (21 U.S.C. § 1901 et seq.)

A whistleblower may submit information about any possible violation of these laws and any relevant regulations that has occurred, is ongoing, or is about to occur. Violations may take the form of:

• A company doing business with a sanctioned entity or entities from a sanctioned country;
• A company allowing sanctioned entities to transact business using that company’s tools or systems;
• The failure of a business to have an effective overall compliance program to ensure it is not doing business with a sanctioned entity;
• Systemic and recurring noncompliance with basic sanctions rules and requirements.

Key Features of the AML Whistleblower Program

• Eligible whistleblowers can receive a reward of up to 30% of monetary sanctions over $1,000,000 that the government imposes based on the information the whistleblower provides.
• The whistleblower must voluntarily provide the information about the BSA or sanctions violation.
• Whistleblowers do not have to be “insiders.” They may receive awards based on their independent knowledge or independent evaluation of publicly-available information, as long as the government is not already aware of the information.
• Whistleblowers who are insiders may work in compliance at the company they are blowing the whistle on.
• Whistleblowers may supply information anonymously, as long as they are represented by an attorney.
• Whistleblowers are not required to be U.S. citizens or residents.  Further, the illegal conduct does not have to have taken place in the United States, as long as the U.S. regulators have jurisdiction.
• Whistleblowers may receive an AML whistleblower award even if their information relates to an existing AML investigation, if they provide additional information that significantly contributes to the success of the existing investigation.
• Employee-whistleblowers may, but do not need to, first report their information through internal compliance procedures.
• Some whistleblowers are entitled to protection from retaliation by their employers based on their reporting of  violations.

The international reach of the new program is worth emphasizing.  Many international whistleblowers have contacted us with information regarding money laundering and sanctions violations.  With this new program on the horizon, we especially look forward to assisting international whistleblowers in bringing their information forward.

Contact an AML Whistleblower Lawyer

This description of the AML Whistleblower Program is general in nature.  The AML Whistleblower Program and the law surrounding it is complex.  The whistleblower attorneys of Constantine Cannon understand the complicated, constantly changing landscape of state and federal whistleblower laws.

If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please Contact us for a Confidential Consultation.