AML Whistleblower Program Rewards for Reporting BSA and Sanctions Violations

In 2021, the U.S. established the AML Whistleblower Program as part of the Anti-Money Laundering Act of 2020. Modeled off the highly successful SEC and CFTC Whistleblower Programs, the AML Whistleblower Program offers monetary awards and anti-retaliation protections to whistleblowers who report money laundering violations.

In 2022, Congress The AML Whistleblower Improvement Act also addressed loopholes present in the original law in order to allow for the payments of rewards for AML whistleblowers.

Administered by the Financial Crimes Enforcement Network (“FinCEN”) of the Department of Treasury, the program provides mandatory rewards to qualifying whistleblowers that result in successful enforcement actions of the Bank Secrecy Act (BSA), the primary AML enforcement law. Key features of the program include:

• Eligible whistleblowers are entitled to a monetary award of 10-30% of the monetary sanctions collected in an enforcement action based on their information.
• Whistleblowers must voluntarily provide information about BSA or sanctions violations.
• Whistleblowers can be insiders or have independent knowledge of violations.
• Whistleblowers may provide information anonymously if represented by an attorney.
• Whistleblowers do not need to be U.S. citizens or residents, and illegal conduct does not have to occur in the U.S. as long as U.S. regulators have jurisdiction.
• Whistleblowers may receive an award even if their information relates to an existing AML investigation, provided it significantly contributes to its success.
• Employee whistleblowers are not required to report their information through internal compliance procedures.
• Whistleblowers are entitled to protection from retaliation by their employers for reporting violations.

Whistleblowers can receive 10-30% of monetary sanctions over $1,000,000 that the government imposes based on their information of a violation.

A violation might include the failure of a financial institution to have a compliance program or pillars of said program and noncompliance with BSA requirements.

It’s also worth noting that the Department of Treasury launched the Kleptocracy Asset Recovery Rewards Program in 2022, offering up to $5 million to whistleblowers who help recover assets linked to foreign government corruption, however, due to deficiencies in this program, whistleblowers should instead utilize the AML Whistleblower Program.

The AML whistleblower program also covers wrongdoing prior to its creation, that are within the statute of limitations for government enforcement actions.

A whistleblower can now submit information about any possible violation of the BSA and its regulations and any violations of sanctions laws.

The statute of limitations for the BSA is five years for criminal penalties under 18 U.S.C § 3282(a) and six years for BSA civil actions under 31 U.S.C. § 5321(b).

The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) are responsible for administering the BSA and sanctions laws. These two entities work closely with other U.S. federal agencies, such as the SEC, CFTC, and DOJ, to ensure compliance and enforce violations.

FinCEN has extensive investigative authority and can pursue enforcement actions for monetary penalties and other civil remedies in federal court or administrative proceedings.

OFAC, on the other hand, is responsible for overseeing and implementing the regulations that dictate the terms and conditions under which companies and individuals can engage in business with sanctioned entities and controls.

Other violations covered under the AML Whistleblower Program:

In addition to covering whistleblowers who report violations of the Bank Secrecy Act, the AML Whistleblower Program covers disclosures on potential violations of a number of related laws concerning money laundering and related misconduct. These include:

• International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.)
• Trading with the Enemy Act (50 U.S.C. § 4305, 4312)
• Foreign Narcotics Kingpin Designation Act (21 U.S.C. § 1901 et seq.)

Under the AML Whistleblower Program, whistleblowers may also report violations of U.S. sanctions. The law explicitly covers whistleblowers who report hidden assets, bank accounts, or property held by sanctioned entities or individuals in the United States and other countries.

Whistleblowers reporting sanctions busting under the AML law are offered the same protections and are entitled to the same awards as those reporting money laundering.

While the law broadly covers all sanctions requirements, the ability to use this law immediately to enforce all of the financial restrictions placed on Russia after the invasion of Ukraine was a driving force behind the sanctions provisions. Given the law’s transnational reach, citizens from countries with financial or trade relations with Russia have the ability to safely and effectively blow the whistle and help U.S. authorities seize sanctioned Russian wealth.

Our firm was the driving force that collaborated with Congressional offices to draft critical amendments to the Anti-Money Laundering Improvement Act. Our team spearheaded efforts to pass the AML whistleblower legislation over the past two years.

• 2022: Collaborating with the National Whistleblower Center and Whistleblower Network News, our team spearheaded a triumphant grassroots campaign advocating for adopting the Anti-Money Laundering Improvement Act. This legislation safeguards and encourages whistleblowers who reveal the concealed assets of oligarchs, sanctions breaches, and criminals’ devious financial operations.

The bill empowers the Department of Treasury to trace the billions of dollars laundered via American banks and to confiscate the assets of Russian oligarchs and others who launder funds to conceal their unlawfully acquired wealth.

• 2021: Kohn, Kohn, and Colapinto led advocacy efforts to amend the whistleblower reward provisions in the Anti-Money Laundering Act of 2020 (AML Act).
• 2018: Stephen M. Kohn, a whistleblower attorney, delivered testimony to the European Parliament, encouraging the expansion of whistleblower protection to encompass money laundering cases.
• 2018: Collaborating with the National Whistleblower Center, our firm successfully convinced Congress to revise the IRS tax whistleblower law, extending its coverage to all crimes investigated by the IRS criminal division, including money laundering.

The AML whistleblower program has an international reach, and the whistleblower attorneys at our firm are experienced in handling these complex cases. If you have information about money laundering or sanctions violations and need assistance, contact our AML whistleblower attorneys for a free and confidential consultation.