Foreign public corruption can distort U.S. markets, taint the U.S. financial system, erode public trust in government institutions, and violate U.S. law. Congress created the Kleptocracy Asset Recovery Rewards Program to help the U.S. government combat foreign government corruption and aid in the United States’ effort to identify and recover stolen assets, forfeit proceeds of corruption, and return stolen assets to the country affected by the corruption.
The program was established by Congress as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. No. 116-283 and is managed by the Department of the Treasury’s Office of Terrorism and Financial Intelligence in close coordination with the Department of Justice and U.S. federal law enforcement agencies. According to the Department of Treasury, the program serves as a “force-multiplier for existing reward programs targeted at a variety of illicit finance threats.”
What are the rewards under the program?
Under the Kleptocracy Asset Recovery Rewards Program awards can reach a maximum of $5 million for information leading to the restraint or seizure, forfeiture, or repatriation of stolen assets. The stolen assets must be linked to an account at a U.S. financial institution or a U.S. branch of a foreign financial institution that comes within the possession or control of any U.S. individual. The Secretary of the Treasury may determine a case merits an award that exceeds $5 million. The Secretary must then personally authorize the greater amount and notify Congress of the determination.
Rewards will be based on multiple factors, including whether the information was previously known to investigative bodies, the risk assumed by the informant, and the significance of the information provided in leading to a successful restraint or seizure, forfeiture, or repatriation of the assets.
To be eligible for consideration of a reward, individuals must submit information under penalty of perjury. Individuals who knowingly provide false information may be referred to law enforcement.
Who is eligible under the program?
Most people are eligible under the program. However, the program does limit eligibility and reward payments for certain individuals:
- Employees of foreign, U.S. federal, state, or local governments who furnish information obtained as part of someone’s official duties are ineligible for a reward under the program, and
- People involved in the misconduct are subject to a mandatory reduction of any reward and might even be denied a reward, at the Secretary of the Treasury’s discretion.
- Any potential reward recipient convicted of criminal conduct arising from their involvement in the underlying corruption shall be denied a reward. Treasury may also seek to recover any reward already paid to such an individual.
Can I remain confidential?
Yes. The Department of the Treasury is required to keep confidential the information, as well as the identity of the individual who supplied the information, and any money paid out by the program. However, there may be instances where some information relating to the source of the information may have to be disclosed, as for example when a matter goes to trial and witness testimony is required, or where the information provided may itself make it possible to identify the source.
What are “stolen assets”?
“Stolen assets,” means financial assets within the jurisdiction of the U.S. constituting, derived from, or traceable to, any proceeds obtained directly or indirectly from foreign government corruption. Financial assets are defined as “funds, investments, or ownership interests, that, after January 1, 2021, come within the U.S. or that come within the possession or control of any U.S. person.”
- In an account at a U.S. financial institution, including a U.S. branch of a foreign financial institution;
- That come within the United States; or
- That come within the possession or control of any U.S. person.
In March 2022, the U.S. Department of the Treasury and Department of Justice launched the Russian Elites, Proxies, and Oligarchs Task Force with international partners to coordinate the freezing and seizing of Russian assets around the world. Specifically, the U.S. government provided the names of 28 Russians about whom they are seeking information.
Finally, FinCEN has issued an advisory that explains how oligarchs are hiding their funds, citing real estate, luxury goods, high-value assets, art, etc.
FinCEN Advisory: Advisory on Kleptocracy and Foreign Public Corruption
What About the SEC, CFTC, or IRS Whistleblower programs?
People who know about stolen assets stemming from foreign corruption may be eligible for awards under the SEC, CFTC, and IRS whistleblower programs as well. The SEC and CFTC offer awards for information on violations of the Foreign Corrupt Practices Act, a powerful anti-bribery law that prohibits US companies and individuals from paying money or any other sort of inducement to a foreign official to influence a decision or action affecting that company’s business. The Kleptocracy Asset Recovery Rewards Program complements the SEC and CFTC programs by offering awards for information that might not otherwise qualify for an award under those programs, including information on assets stolen through corruption beyond the SEC’s and CFTC’s jurisdiction and information on assets linked to bribery already known to the U.S. government. For example, the Treasury Department specifically welcomes information on stolen assets linked to FCPA violations by Odebrecht S.A. and Braskem S.A., Brazilian construction and petrochemical companies that paid over $3.5 billion in 2016 to resolve charges brought by the Department of Justice.
In addition, the IRS offers awards for information on violations of U.S. tax laws. Information about kleptocrats and oligarchs may reveal such violations and a person who provides the IRS with such information may be eligible for a reward under the IRS Whistleblower program.
Information about foreign corruption may implicate multiple award programs.
The Kleptocracy Asset Recovery Rewards Program also overlaps with the anti-money laundering (AML) program. FinCEN offers rewards for information on the evasion of U.S. sanctions laws. As many oligarchs and kleptocrats are now subject to economic sanctions, a whistleblower who learns about the institutions helping them hide their assets or failing to screen for sanctions evasion may be eligible for an award under the AML whistleblower program.
If you are aware of information that might lead to the restraint or seizure, forfeiture, or repatriation of stolen assets and would like to discuss your case with experienced whistleblower lawyers, please contact Phillips & Cohen for a free, confidential review of your matter.