Money launderers try to mask the origins of large sums of money. It is generally done to conceal money generated from criminal activities. A whistleblower program, created in 1984, helped people report money laundering activities. This helps the government prosecute and hold accountable those who launder money. After its start, several limitations hindered using the program, making it unappealing. Among them was a small whistleblower award cap for their information. Plus, there were no provisions to protect whistleblowers from employer retaliation. Given these drawbacks, most people were not willing to come forward. This is due to the negative consequences of exposure and limited financial incentives.
Congress passed the National Defense Authorization Act (NDAA) in 2021. Among its many law provisions, it included the largest and most sweeping legislative reforms to the anti-money laundering laws in the US. Not since 2001 were changes to U.S. anti-money laundering (AML) and counter-terrorism financing laws made. This law improved the whistleblower program, which until this amendment, was virtually ineffective against money laundering activities.
To improve the AML whistleblower program, the NDAA eliminated the $150,000 award cap. Whistleblowers reporting AML violations can receive up to 30% from recovered monetary sanctions. Like other whistleblower programs, there are no minimum percentages. Employers cannot retaliate or discriminate against employees who report suspected AML violations. This new provision allows whistleblowers to sue their employers for many factors. It includes compensatory damages, reinstatement, double back-pay with interest. It also includes reimbursement for litigation costs and attorneys’ fees. This enhances program appeal even more. Without these retaliation protections, many would hesitate to blow the whistle on their employers. Between these two changes, the appeal of the program has greatly increased. Many who have the necessary information to bring one of these cases forward work in finance. Before the reform, few were willing to blow the whistle, given their earned salaries. Proper financial compensation and retaliation protection added to this issue.
To be eligible to receive an award under this program, the following criteria must be met:
an individual must volunteer to report the information to either their employer, the Treasury Dept., or the Dept. of Justice;
the information must be original;
the information must lead to a successful enforcement action; and
the resulting enforcement action must lead to at least $1 million in governmental recovery.
Unlike other whistleblower programs, the eligibility for receiving awards differ. It does not prevent compliance personnel, internal or external auditors, or legal counsel.
The Financial Crimes Enforcement Network (FinCEN) is part of the United States Department of the Treasury bureau. FinCEN is responsible to manage this whistleblower program. When submitting their information to FinCEN, whistleblowers can choose to remain anonymous. To submit information anonymously, legal counsel must represent the whistleblower. Eligible whistleblowers whose information leads to successful enforcement action may receive a reward. Yet, to receive it they must disclose their identity to the Secretary of the Treasury.
Although the NDAA granted the Secretary of the Treasury rulemaking authority, program rules were not yet adopted. Details about how the program works, and how to submit information, remained unclear. However, rules and regulations will soon be adopted to further clarify program details. Many more whistleblowers could come forward with valuable money laundering info. Regardless, people can still submit information under this program.
Money laundering is not only a crime but results from other crimes committed. Yet, the government usually lacks the required evidence to effectively enforce its laws. It is difficult to enforce anti-money laundering, especially with cybercriminals. With the NDAA protections, whistleblowers help the government fight against money launderers.