New Law Offers Greater Rewards for Whistleblowers Who Expose Money Laundering
March 3rd, 2023
Few crimes attract as much scrutiny, enforcement efforts and prosecutions by the federal government as money laundering does. And the very nature of money laundering – concealing the source of ill-gotten funds through myriad financial tricks and transactions – makes it one of the more challenging crimes to uncover. That’s why law enforcement often relies on courageous whistleblowers to report and expose such activity. Now, under recently passed federal legislation, those who blow the whistle on money laundering stand a greater chance of receiving compensation for their efforts if they lead to the recovery of ill-gotten funds.
Signed into law as part of the omnibus spending bill in December 2022, the federal Anti-Money Laundering (AML) Whistleblower Improvement Act expands whistleblower rewards and strengthens protections under a previously established AML Whistleblower Program overseen by the U.S. Treasury Department. That program was riddled with loopholes and exceptions that limited its effectiveness and undermined the incentive for whistleblowers to come forward.
Guaranteed Minimum Award for Eligible AML Whistleblowers
As with many, but not all, whistleblower programs, the AML Whistleblower Program offered the promise of financial rewards to individuals who provided information about money laundering activities. But unlike other programs, the AML program didn’t guarantee a minimum amount of compensation for whistleblowers.
For example, the Security and Exchange Commission’s (SEC) program provides that eligible whistleblowers receive 10-30% of the amounts recovered. The AML program, on the other hand, contained no such guarantee. Rather, it only put a limit (30%) on the amount of money a whistleblower could obtain. This meant that an individual whose actions resulted in the federal government’s recovery of tens of millions of dollars could wind up receiving $1 for their efforts – or nothing at all. This toothless reward program hardly made it worth the risk for whistleblowers who put their careers, livelihoods and reputations on the line by reporting illegal activities. Indeed, few whistleblowers came forward under the program, and not a single reward was given during the two years of its existence.
The AML Whistleblower Improvement Act remedies this deficiency by guaranteeing that a qualifying whistleblower receive “not less than 10 percent” of amounts recovered or collected in a government enforcement action. The act also establishes a self-sustaining fund for whistleblower awards financed by the amounts collected in whistleblower-assisted money laundering cases. Previously, the law contained no mechanism for funding the program.
AML Expanded to Include Whistleblowers Who Report Sanctions Violations
The act also expands the AML program to include violations of U.S. sanctions laws such as those imposed on Russian oligarchs after that country’s invasion of Ukraine. This means that rewards and protections are now available to whistleblowers who report this type of illegal conduct.
Protections Against Retaliation
The new and prior AML whistleblower laws protect whistleblowers against retaliation by their employers for reporting illegal activities or otherwise assisting the government in its anti-money laundering efforts. A victim of prohibited retaliation can seek back pay, reinstatement or front pay, compensatory damages and other remedies from their employer.
If you’re aware of money laundering or related financial crimes and are considering coming forward, you should consult an experienced whistleblower attorney before doing so. For 25 years, Halunen Law has protected the rights and reputations of countless individuals who had the courage to do the right thing, recovering millions of dollars in compensation for them in the process. Call Halunen Law at 612-605-4098 or complete our contact form to arrange for your free initial consultation.