Congress Fixes Major Hole in Treasury’s Nascent Whistleblower Program While Expanding its Scope to Sanctions Evaders
- The Treasury Whistleblower Program now provides for guaranteed awards of 10% to 30% of the government recovery in covered actions
- The Treasury Whistleblower Program has been expanded to include not just tips concerning anti-money laundering violations but also those regarding various forms of sanctions evasion
- The new law goes hand-in-hand with the government’s aggressive crackdown on Russian sanctions evaders and those that assist them
During the holidays, in a rare bipartisan move, Congress passed the Anti-Money Laundering Whistleblower Improvement Act (“AMLWIA”), an unheralded law with massive implications for domestic and international whistleblowers.
I. The New Law Provides Whistleblowers a Real Incentive
Back in 2020, the government enacted the Anti-Money Laundering Act of 2020 (“AMLA”). AMLA provided certain retaliation protections for whistleblowers reporting violations of the anti-money laundering statutes (i.e., the Bank Secrecy Act). Just as critically, AMLA established that whistleblowers (both U.S. and foreign citizens) could receive monetary awards if they provide original information in reporting anti-money laundering violations to their employers or the government when such tips lead to successful actions by the Department of the Treasury (e.g., via FinCEN) or Department of Justice where the sanctions exceed $1 million.
This program (“the Treasury Whistleblower Program”) looked promising, but it failed to provide a real “carrot” for whistleblowers. While AMLA established that successful whistleblowers could receive up to 30% of any recovery by the government, it never set out a minimum award. So, under AMLA, potential whistleblowers were placed in an unenviable position. They could report anti-money laundering violations, potentially at great risk, but even if they were entitled to a recovery, they could receive a pittance. Needless to say, AMLA’s incentive system had a glaring hole in it. The incentive to come forward was illusory.
AMLWIA remedies the problem and expands the subject matter of the program as well. First, the new law provides that, in line with the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) whistleblower programs, a successful Treasury Whistleblower must receive an award between 10% and 30% of the monetary sanctions collected by the government. AMLWIA also establishes a $300 million Financial Integrity Fund to pay such awards. These are significant changes that will motivate whistleblowers going forward.
II. AMLWIA Expands the Treasury Whistleblower Program to Sanctions Evasion
AMLWIA expanded the Treasury Whistleblower Program to cover tips relating to the evasion of sanctions in violation of the International Emergency Economic Powers Act, the Foreign Narcotics Kingpin Designation Act, and sections 5 and 12 of the Trading with the Enemy Act. In other words, whistleblowers can now report a wide range of sanctions violations to the government and, if successful, obtain an award.
This provision was tailor-made to assist with the government’s ongoing crackdown on Russian sanctions evaders. But the new law is not just focused on Russian assets and those facilitating sanctions evasion for Russian oligarchs and entities. The program covers all violations of the operative anti-money laundering and sanctions laws. For example, given the federal government’s recent full court press on bad actors in the cryptocurrency space, AMLWIA provides yet another tool for whistleblowers in that industry (beyond the SEC and CFTC whistleblower programs) – an industry which has been afflicted by notoriously lax anti-money laundering controls.
III. The Treasury Whistleblower Program Looks to Follow in the Footsteps of the Government’s Earlier, Highly Successful Whistleblower Programs
The Treasury Whistleblower Program should prove to be another successful public-private partnership akin to the False Claims Act and the SEC and CFTC whistleblower programs. Anti-money laundering and sanctions violations can lead to recoveries in the hundreds of millions, and even billions, of dollars. French bank BNP Paribas famously resolved a sanctions violations case involving violations of the International Emergency Economic Powers Act and Trading with the Enemy Act for $8.9 billion, one of the largest recoveries against a financial institution in history. A 10% to 30% award in such high figure cases is a remarkable incentive for whistleblowers.
Money laundering and sanctions violations occur mostly in the dark. Thus, the government remains highly dependent on corporate insiders and others with valuable information to bring such wrongdoing to light. AMLWIA will alter the whistleblowing landscape for the better by providing whistleblowers with a real incentive to blow the whistle while expanding the program to sanctions violations. Like the SEC and CFTC whistleblower programs, it may take several years before we see awards under these programs. But like those programs, we should expect awards under the Treasury Whistleblower Program to start out substantial and grow larger over time as the program gains its footing.