Constantine Cannon Submits Comments to Proposed Rulemaking for FinCEN AML/Sanctions Whistleblower Program
By the Constantine Cannon Whistleblower Team
As we previously reported, two months ago the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a press release announcing its Notice of Proposed Rulemaking “to fully implement” FinCEN’s AML/Sanctions Whistleblower Program.
What is the FinCEN AML/Sanctions Whistleblower Program?
Congress established the FinCEN Whistleblower Program in 2021 (expanding it in 2022) to provide financial rewards and protections to whistleblowers reporting anti-money laundering (AML) violations under the Bank Secrecy Act (BSA) and sanctions violations under the various sanctions-related statutes. Whistleblowers can receive up to 30% of the Government’s recovery from any resulting AML or sanctions enforcement action.
FinCEN runs the whistleblower program and enforces the BSA. The Office of Foreign Assets Control (OFAC) enforces the sanctions statutes (which include the International Emergency Economic Powers Act, the Trading With the Enemy Act, and the Foreign Narcotics Kingpin Designation Act.) According to a February 2026 FinCEN bulletin, the most common AML and sanctions violations the agency is targeting are (i) financial institutions lacking proper controls to identify customers engaging in suspicious financial activity, and (ii) companies submitting falsified trade-related documents to conceal sanctionable activity.[1]
What is the Purpose of FinCEN’s Proposed Rulemaking?
FinCEN has been accepting whistleblower tips and submissions since the program’s launch. However, the agency has not yet adopted the final rules that will govern the program. With its proposed rulemaking, FinCEN has set forth its proposed rules for the program subject to the 60-day comment period during which the agency has invited all relevant constituencies to weigh in with any comments or proposed changes.
Finalizing these rules will be FinCEN’s final step in formalizing the whistleblower program with the program’s first awards likely to be issued relatively soon after that. In fact, on FinCEN’s recently launched whistleblower-dedicated website, the agency explicitly states that “once that regulation is finalized, FinCEN will begin processing and paying awards.” And in announcing that launch, Treasury Secretary Scott Bessent further stressed how the agency is “going to offer whistleblower payments to anyone who wants to tell us the who, what, when, where, and how this fraud and money laundering has occurred.”[2]
What Comments Did Constantine Cannon Have to Improve FinCEN’s Proposed Whistleblower Rules?
Last Friday (May 29), Constantine Cannon submitted comments to the proposed rules drafted by Constantine Cannon whistleblower partners Marlene Koury and Gordon Schnell. Koury and Schnell “applaud[ed] FinCEN for how it has managed the Whistleblower Program so far,” underscoring how “receptive and responsive” the agency has been and how it has “consistently treated our whistleblower-clients with respect and appreciation for coming forward.”
Koury and Schnell carefully reviewed the proposed rules with the aim of identifying any changes or improvements they think would make the FinCEN program as successful as possible. In particular, they “focused on ensuring that whistleblowers are best protected and incentivized in coming forward given the significant risks they face of retaliation and social isolation for doing so.”
Here are some of the key recommendations they proposed in this regard:
- Credit for Reporting Internally. Koury and Schnell proposed more clarity on what “credit” whistleblowers will receive under the program when they report their concerns to their employer internally, prompting the company to investigate the allegations, uncover violations, and then voluntarily report them to the Government. According to Koury and Schnell, the proposed rule seemingly gives full credit to the whistleblower if the information they provide the company is the same information the company subsequently provides the Government. However, they pointed to the potential complication where the company provides more or different information to the Government than the whistleblower originally provided internally. Koury and Schnell believe in that case the whistleblower should still get full credit since the internal reporting caused the company to launch the investigation, which led to the uncovering of violations, which the company then reported to the Government. Koury and Schnell believe clarifying the rule in this way is consistent with the agency’s goal of encouraging internal reporting and would remove the concern a whistleblower might otherwise have that reporting internally might preclude their eligibility under the program if it causes the company to self-report.
- 120-Day Waiting Period. The proposed rule requires waiting at least 120 days before reporting to FinCEN if the whistleblower is an officer or director of the company or serves in an audit or compliance function. Aside for the need for greater clarity on who is covered by this provision, Koury and Schnell proposed a carveout for this provision that would allow reporting before the end of the 120-day waiting period for good cause. Koury and Schnell recognize the agency’s interest in promoting internal compliance programs and giving companies time to investigate and address alleged wrongdoing, but noted circumstances where waiting the full 120 days would directly undermine the agency’s ability to investigate and take effective enforcement action. For example, the whistleblower may be privy to company leadership’s decision to ignore, suppress, or destroy the evidence of wrongdoing. Or, the misconduct may be time sensitive and if not addressed immediately could lead to substantial, irreversible public harm. In these instances, and countless others, Koury and Schnell say that delaying the whistleblower’s ability to report to the agency will serve no legitimate law enforcement purpose. It is especially problematic, they say, because the potential whistleblowers this provision covers are those best positioned to have the most credible inside information of wrongdoing and to understand whether the company is planning to take any serious action to address it.
- Larger Awards for Reporting Internally. Under the proposed rule, whether the whistleblower reported internally is a factor that will affect the size of any whistleblower award. Again, while Koury and Schnell appreciate the agency’s interest in encouraging whistleblowers to report internally, they note there are circumstances where taking this path is not in the best of interest of the whistleblower and can expose the whistleblower to serious risk of retaliation. Therefore, they suggest that in determining the amount of a whistleblower award, any weight given to whether the whistleblower used a company’s internal compliance program must account for whether the whistleblower had good reason to avoid that program. They likewise believe any retaliation the whistleblower suffered for reporting internally should be a factor that powerfully supports a larger award. Doing so, they say, will further support the agency’s interest in encouraging whistleblowers to report internally and hopefully further discourage companies from taking any adverse action against employees who do.
- Timing of Award. The proposed rules do not provide for any timeline by which FinCEN must decide and pay out whistleblower awards. According to Koury and Schnell, this has been a major issue under the SEC and CFTC Whistleblower Programs, with the agencies taking years to rule on award applications. They recommend putting concrete (but reasonable) restrictions on the timing of whistleblower awards (suggesting within 120 days of the Government’s receipt of the collected funds). Even more importantly, they argue for similar timing requirements on when the agency makes its awards determinations (suggesting within 6 months of the award application or objections to a preliminary ruling). According to Koury and Schnell, leaving the timing of a whistleblower award open-ended as is currently proposed will be a major drawback of the program and dissuade would be whistleblowers from coming forward. They recount their firsthand dealings with potential whistleblowers who look to timing considerations as a significant factor in assessing whether it is worth it for them to move forward under the various whistleblower rewards programs.
- Whistleblower Confidentiality. While the proposed rules provide significant safeguards for whistleblower confidentiality, they also allow the Government to identify the whistleblower under certain circumstances, like if the Government intends to use the whistleblower as a potential witness at trial. Koury and Schnell recognize the Government may be required to identify the whistleblower in limited circumstances, however, they believe there should be safeguards to mitigate the potential harm the whistleblower may face. One they suggested is to provide advanced notice and an opportunity for the whistleblower to discuss the agency’s plan for disclosing information that would identify the whistleblower. A second safeguard they proposed is requiring the agency to take all necessary steps to avoid disclosing the whistleblower status of the individual, even if the agency otherwise needs to disclose the individual as a potential witness for the Government. And a third safeguard they proposed is providing the whistleblower an opportunity to withdraw their right to any award or otherwise renounce their formal whistleblower status to mitigate the potential backlash they may face appearing as a Government witness.
Click here for a copy of the formal comments Koury and Schnell submitted to FinCEN.
Koury and Schnell hope FinCEN will give serious consideration to their comments and recommendations, which they believe will help strengthen the protections and incentives of whistleblowers and the success of the program overall. Koury says, “The unequivocal success of the SEC Whistleblower Program demonstrates that providing strong protections and incentives to whistleblowers is the key to a successful whistleblower program.”
Koury adds that “while the proposed FinCEN whistleblower rules are strong in this regard, we have pointed to several areas where we think the final FinCEN rules can be even stronger.” Either way, Koury and Schnell look forward to working closely with FinCEN in supporting their whistleblower clients and helping the government combat money laundering, sanctions violations, terrorist financing, and other wrongdoing that puts national security at risk.
Constantine Cannon Has Substantial Experience Representing Whistleblowers Under FinCEN’s AML/Sanctions Whistleblower Program
Constantine Cannon has substantial experience representing whistleblowers under the FinCEN program, with multiple whistleblower submissions pending before the agency. Koury says the flow of AML/sanctions whistleblower intakes the firm has received has never been higher and has been particularly heavy over the past several months with all the attention the program has received.
So if you have information relating to potential AML and sanctions violations, or what it means to be a whistleblower more broadly, please do not hesitate to contact us. We will connect you with an experienced member of our whistleblower team for a free and confidential consultation.
[1] See https://www.fincen.gov/system/files/2026-02/owb-whistleblower-bulletin.pdf.
[2] See https://home.treasury.gov/news/press-releases/sb0394.