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Project Proposes Legislative Action to Protect and Incentivize AML Whistleblowers

Posted  May 29, 2020

Offshore Alert and the Association of Certified Financial Crime Specialists were joined by Constantine Cannon Whistleblower Lawyers Poppy Alexander, Eric Havian, and Michael Ronickher in developing a proposal to enact legislation that would create statutory incentives and protections for whistleblowers with information about money laundering.

The proposal, unveiled on May 25, 2020, was developed in response to a challenge in the FT Innovative Lawyers Global Legal Hackathon to figure out ways to mobilize whistleblowers to combat the rise of fraud and abuse in the COVID-19 era.

Money Laundering on the Rise

Money laundering has been flourishing amidst the chaos of the global pandemic.  Oversight is stretched thin and focused elsewhere.  At the same time, criminals see new opportunities to prey on the vulnerable.

The global Financial Action Task Force, an intergovernmental anti-financial-crime body, has issued a report noting an “increase in COVID-19-related crimes, such as fraud, cybercrime, misdirection or exploitation of government funds or international financial assistance.”  Although the increased crime has led to a greater need for money laundering, the traditional laundering opportunities have been affected by the same shutdowns as the rest of the global economy.  As you might expect, money laundering has thus shifted online, where it can utilize anonymous transactions and cryptocurrency.

AML (Anti-Money Laundering) enforcement is complex and requires substantial resource commitment to the effect.  But the current global pandemic has curtailed and redirected those resources.  Moreover, various regional economic stimulus initiatives mean AML teams have been tacitly told to not get in the way of a country doling out funds to support businesses and individuals, so critical AML requirements are being ignored.

The cumulative result is that watchdogs are not visiting countries to evaluate compliance, fewer suspicious activity reports are being filed, and investigators are stumbling over coordination and cooperation.  That means more fraud, money laundering, and cyber-enabled scams can continue for longer.

The Project Proposal

December 2020 Update: New NDAA Monday Laundering Whistleblower Reward ProvisionsHow do we fight back?  Whistleblowers.  They can fill the gaps left by under-resourced and distracted law enforcement, and their insider information can help track the ephemeral trails left by online money laundering.

We have seen in our practice the enormous value whistleblowers can provide to law enforcement, and the successful whistleblower programs at the SEC, IRS, and Department of Justice are further testament to their positive impact.

With that in mind, the project proposes that Congress act to pass legislation that would provide whistleblowers with the protections and incentives they need.  If it does, whistleblowers will play an equally critical role in combatting money laundering as they do fraud in government contracts, securities, and tax.  Read the project’s whitepaper, including proposed legislation, on the Global Legal Hackathon site.

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Tagged in: CC Lawyers, COVID-19, Importance of Whistleblowers, Money Laundering, Whistleblower Protection Laws,