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Anti-money-laundering whistleblower program offers rewards and protections

Whistleblowers who report money laundering violations may do so through a  government program that offers rewards and protections against job retaliation.

Congress included the anti-money laundering whistleblower program as part of the fiscal 2021 National Defense Authorization Act that was enacted in January 2021.

The Defense authorization contains provisions to overhaul anti-money laundering laws in addition to establishing a new whistleblower program.

The whistleblower program is expected to be a game-changer for anti-money laundering enforcement. Congress created similar whistleblower programs at the Securities and Exchange Commission and the Commodity Futures Trading Commission as part of the Dodd-Frank Act in 2010, and now whistleblowers are a key part of their enforcement efforts.

The anti-money laundering whistleblower program will be administered by the Treasury Department.

Key points about the anti-money laundering whistleblower program, as laid out in the Defense legislation:

  • To qualify, a whistleblower must voluntarily provide new (original) information about specific money laundering schemes – either from first-hand evidence or through independent analysis.
  • For a whistleblower to be eligible for a reward, monetary sanctions (penalties, disgorgement and interest) from the enforcement action based on the whistleblower’s information must exceed $1 million.
  • Whistleblower rewards can be as much as 30% of the monetary sanctions, depending on the significance of information and the degree of assistance that the whistleblower provided with the investigation and enforcement action.
  • The government may not disclose the identity of the whistleblower or any information that could reasonably be expected to reveal the whistleblower’s identity unless required to so in connection with a court proceeding.
  • Whistleblowers may submit their information anonymously to the Treasury Department if they do so through an attorney. However, they must reveal their identity to the department before they are paid an award.
  • Whistleblowers who are convicted of a criminal violation related to the illegal conduct they reported are not eligible for rewards.
  • The law prohibits employers from retaliating against whistleblowers, specifically stating that employers cannot “directly or indirectly, discharge, demote, suspend, threaten, blacklist, harass, or in any other manner discriminate against a whistleblower in the terms and conditions of employment or post-employment.” Those who suffer retaliation are entitled to reinstatement, two times the amount of back pay plus compensatory damages.
  • Employees of entities insured under the Federal Deposit Insurance Act and the Federal Credit Union Act would be prohibited from suing for employment retaliation.

The anti-money laundering whistleblower program differs from the SEC and CFTC whistleblower programs in certain significant ways, including:

  • The Treasury Department program would not offer a minimum award. In contrast, the SEC is required to issue a reward that ranges from 10% to 30% of the amount collected. The Defense bill only sets a maximum award (30%). A guaranteed minimum award has been a critical factor for successful whistleblower programs.
  • Whistleblowers who suffer employment retaliation would have to file a complaint with the Department of Labor first rather than go directly to court. If the department fails to issue a final decision in 180 days, the whistleblower then could file a complaint in federal district court.

The sections of the Defense Authorization Act for Fiscal Year 2021 that creates the anti-money laundering whistleblower program are posted here.

 

 

 

 

 

 

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