The pro bono team at Kohn, Kohn and Colapinto are leading advocacy efforts to urge Congress to fix the whistleblower reward provisions of the Anti-Money Laundering Act of 2020 (AML Act). Our firm has worked directly with Congressional offices on drafting amendments to the AML Act that would solve issues and lead to a successful anti-money laundering whistleblower reward program.
Money laundering is a widespread global crime which plays a destructive role in facilitating international corruption, terrorist financing, bribery, tax evasion, and drug dealing. On January 1, 2021, as part of the National Defense Authorization Act (NDAA), Congress enacted the AML Act of 2020. Recognizing that whistleblowers would be key to enforcing the AML Act, Congress included a new whistleblower reward law as part of the Act. The reward law was modeled off the highly successful Dodd-Frank Act (DFA). In its final form, however, the AML Act strays from the DFA model in a number of key ways and includes provisions that are counterproductive to whistleblowing.
Unlike the DFA and all other modern reward laws, such as the False Claims Act and the IRS reward law, the AML Act does not require the Secretary of Treasury to make any minimum award to a qualified whistleblower. While the DFA mandates that qualified whistleblowers be granted awards of 10-30% of the sanctions obtained in connection with their disclosure, the AML Act sets a maximum amount of 30% but no minimum. Thus the awards are entirely discretionary. It permits the Secretary of Treasury to deny fully qualified whistleblowers any award whatsoever, regardless of the amount of sanctions obtained, the contributions of the whistleblower, and the hardships suffered by the whistleblower.
Furthermore, the AML Act did not establish a fund to finance the payment of whistleblower awards. Instead, the law requires that whistleblower rewards be paid as part of the Congressional appropriations process. It is unrealistic that Congress, every year, will somehow allocate money to whistleblowers. Thus, using appropriations to pay whistleblowers has been fully discredited.
Instead of relying upon appropriations, the DFA established funds specifically to finance the SEC and CFTC whistleblower programs. These funds are paid for strictly by sanctions obtained from criminals and wrongdoers in successful enforcement actions caused by whistleblower disclosures. No taxpayer funds are ever used.
Thus, the AML Act of 2020 established an unfunded discretionary reward program. This is how older whistleblower reward programs were designed. These old programs did not work and neither will the AML program. Congress amended all of the older laws to make the payment of awards mandatory if a whistleblower met the strict criteria established by Congress. Congress must do the same to the AML Act.
With the input of Kohn, Kohn and Colapinto’s pro bono team, an amendment to the AML Act has been introduced which would address these two issues. Senator Chuck Grassley and Raphael Warnock’s S.Amendment.4437 offers corrections to the AML Act which simply conform the current AML whistleblower reward law to the procedures of all other effective modern whistleblower laws.
The Amendment establishes a minimum payment of 10% of the collected proceeds obtained as a direct result of the whistleblower’s information and sacrifices. It also establishes a fund financed by these same proceeds which pays for the whistleblower awards. S.Amendment.4437 contains language previously approved by Congress in the three most recent whistleblower reward laws. The Amendment is widely supported by whistleblower advocacy groups.