Laws and policies to police money laundering exist on both the national and international level. In recent decades, there has been an uptick in efforts to uncover and prevent money laundering. New legislation has been passed, and new enforcement efforts have been launched.
The first major anti-money laundering law in the United States was the Bank Secrecy Act (BSA) of 1970. The law instituted a number of recordkeeping standards for banks and requires financial institutions to inform the Department of Treasury of large or suspicious bank deposits. It was not until the passage of the Money Laundering Control Act in 1986, however, that money laundering itself became illegal.
In 1987, the G-7 formed the Financial Action Task Force (FATF) to police money laundering on an international scale. There are currently 39 member nations in the FATF which examines money laundering techniques and trends, reviews the enforcement and prevention actions which have already been taken at a national or international level, and establishes the steps that still need to be taken to combat money laundering.
In 2021, the United States passed the Anti-Money Laundering Act (AML Act) which contains numerous amendments to the BSA and other anti-money laundering laws. The law aimed to modernize reporting requirements and to expand the authority of investigative and enforcement efforts.
The AML Act includes a whistleblower reward provision modeled on those of the Dodd-Frank Act. Under the law, whistleblowers who provide authorities with original information about money laundering violations which leads to a successful enforcement action are entitled to an award of up to 30% of the sanctions collected by the government in the case. The Act additionally includes anti-retaliation protections for whistleblowers disclosing money laundering violations.
While the whistleblower reward provision of the AML Act was an important step towards incentivizing insiders to expose money laundering, the Act has a number of shortcomings which undermine the legislation. Notably, the law does not establish a mandatory minimum for awards, meaning that awards are in practice completely discretionary. Furthermore, the law does not extend anti-retaliation protections to employees of Federal Deposit Insurance Corporation (FDIC) or Credit Union insured institutions.