AML Whistleblowers Serving a Vital Role Combatting Illicit Financing

On May 16, 2024, the U.S. Department of the Treasury issued the 2024 National Money Laundering, Terrorist Financing, and Proliferation Financing Risk Assessments (AML/CFT Strategy), which provides a blueprint of the U.S. government’s goals, objectives, and priorities to disrupt and prevent illicit financial activities.  The AML/CFT Strategy is designed to promote a strong and transparent financial system to deny illicit actors access to the resources they need to carry out harmful activities or to profit from their crimes.

The illicit actors include terrorist organizations developing ways to move and raise funds, criminal organizations engaged in narcotics and human trafficking within the U.S. and abroad, cybercriminals engaged in massive online frauds, corrupt actors hiding behind anonymous transactions, and nation-states engaged in ransomware and weapons of mass destruction proliferation financing.  Criminals and money launderers often obfuscate the source of illicit funds through networks of shell, front and legitimate companies, unlicensed money transmission, and the provision of supporting documentation.

As money laundering schemes become increasingly complex, whistleblowers can play a critical role assisting the government to identify, investigate, and prosecute violations of the Bank Secrecy Act.  And whistleblowers can help combat the vulnerabilities in the AML/CFT compliance regime that permit illicit actors to bypass systems designed to detect and prevent illicit financial activity.  According to the AML/CFT Strategy, those vulnerabilities include abuse of the company formation process to create shell and front companies, AML/CFT compliance deficiencies at U.S. financial institutions, and challenges in detecting, seizing, and forfeiting illicit proceeds of crime.

Whistleblowers can also help target the predicate crimes that generate the largest amount of illicit proceeds laundered in or through the U.S., which include fraud, drug trafficking, cybercrime, human trafficking and human smuggling, and corruption.

AML Whistleblower Reward Program

The FinCEN AML Whistleblower Reward Program provides financial incentives for whistleblowers to take the risks entailed in reporting money laundering.  The whistleblower rewards provision of the Anti-Money Laundering Act (AMLA) incentivizes whistleblowers to report original information about money laundering by requiring the Treasury to pay monetary awards ranging from 10 to 30 percent of the collected monetary sanctions in a judicial or administrative action brought under the Bank Secrecy Act, provided that the sanctions exceed $1,000,000.   Whistleblowers are permitted to report anonymously if represented by an attorney.  This provision serves as a powerful tool in the fight against money laundering, as it encourages whistleblowers to disclose critical information that may lead to the detection and prosecution of illicit financial activities.

In a May 6, 2024 speech, FinCEN Director Andrea Gacki discussed the success of the AMLA whistleblower program in generating significant disclosures of money laundering and sanctions violations:

[The AML whistleblower] program holds tremendous potential as an enforcement force-multiplier. Whistleblowers have submitted information relating to some of the most pressing policy objectives of the United States, from Iran- and Russia-related sanctions evasion to drug-trafficking to cyber-crimes and corruption.

. . . We have received over 270 unique tips since the program’s inception, and many of the tips received have been highly relevant to many of Treasury’s top priorities. Whistleblowers who voluntarily submit original information to FinCEN about certain violations of the BSA or economic sanctions could be awarded between 10 to 30 percent of penalties collected if their information leads to successful enforcement actions.

Policy Recommendations to Strengthen AML/CFT Enforcement

The AML/CFT Strategy recommends increasing transparency, shoring up compliance guidance for financial institutions, improving collaboration between law enforcement, U.S. national security and intelligence agencies and international partners, and developing new, secure platforms for financial transactions. The Treasury plans to take the following steps to implement the AML/CFT Strategy:

1. close legal and regulatory gaps in the U.S. AML/CFT framework that illicit actors exploit to anonymously access the U.S. financial system by operationalizing the beneficial ownership information registry for law enforcement, national security, and intelligence use; finalizing rules related to the residential real estate and investment adviser sectors; and assessing other sectors that may be vulnerable to illicit finance;
2. promote a more effective and risk-focused U.S. AML/CFT regulatory and supervisory framework for financial institutions to make them more efficient and effective in preventing illicit finance by providing clear compliance guidance, sharing information appropriately, and ensuring adequate resourcing for supervisory and enforcement functions;
3. enhance the operational effectiveness of law enforcement, other U.S. government agencies, and international partnerships in combating illicit finance so threat actors cannot find safe havens for their operations; and
4. realize the benefits of responsible technological innovation in the U.S. by developing new payments technology, supporting the use of new mechanisms for private sector compliance, and utilizing automation and innovation to find novel ways to combat illicit finance.

Guide to FinCEN AML Whistleblower Program

Who is Eligible for an AMLA Whistleblower Reward?

In contrast to the SEC whistleblower program eligibility rules, the FinCEN AML whistleblower reward program does not impose limitations on award eligibility for whistleblowers who gain information through the performance of compliance or audit job duties.  Indeed, the AMLA whistleblower law expressly authorizes compliance personnel to obtain AMLA whistleblower awards in that the term “whistleblower” includes an individual who provides information relating to a violation “as part of the job duties of the individual.” Non-U.S. citizens are eligible for AMLA whistleblower awards.

Can an AML Whistleblower Report Money Laundering Anonymously?

If represented by an attorney, an AML whistleblower may submit a tip anonymously to the Financial Crimes Enforcement Network (FinCEN).  The AMLA whistleblower rewards law requires the Treasury and Justice to take steps to protect the confidentiality of AML whistleblower submissions.  Any officer or employee of either agency must not disclose information provided by a whistleblower “which could reasonably be expected to reveal the identity of a whistleblower,” except where the agency is required to disclose the information to a defendant in a public proceeding instituted by the agency and in accordance with the Privacy Act.

How Does the AML Whistleblower Reward Program Determine the Amount of an AML Whistleblower Reward?

To determine the amount of an AML whistleblower award, the Treasury will consider:

• the significance of the information provided by the whistleblower to the success of the covered money laundering judicial or administrative action;
• the degree of assistance provided by the whistleblower and any legal representative;
• the programmatic interest of Treasury in deterring the particular violations that the whistleblower disclosed; and
• additional relevant factors that Treasury will promulgate, which will likely echo the factors that the SEC employs to determine the amount of an SEC whistleblower award.

How Can an AML Whistleblower Lawyer Help a Whistleblower Maximize their Recovery?

The anti-money laundering whistleblower attorneys at Zuckerman Law have experience representing whistleblowers disclosing money laundering and sanctions violations. Our multi-disciplinary whistleblower rewards practice is staffed with an attorney who is also a Certified Public Accountant and Certified Fraud Examiner with substantial experience investigating complex financial frauds.

Contact us today to find out how we can help you qualify for a whistleblower reward while remaining anonymous.