The Anti-Money Laundering Whistleblower Improvement Act (2022) (AML Whistleblower Improvement Act) represents a significant stride in promoting transparency and accountability in financial institutions and empowering whistleblowers to report wrongdoing. It grants individuals the ability to report violations related to money laundering laws with protection from retaliation and the possibility of reward. This blog post reviews the several facets of the Act, addressing key questions on its protections, confidentiality, covered activities, rewards, reporting process, and legal recourse. We will also discuss a recent anti-money laundering violation.
1. What Protections Are Provided Under the Act?
The Act defines a “whistleblower” as an individual or group providing information about violations of the Bank Secrecy Act, International Emergency Economic Powers Act, the Foreign Narcotics Kingpin Designation Act, and the Trading with the Enemy Act related to money laundering to their employer, the Secretary of the Treasury, or the Attorney General of the United States. It prohibits employers from retaliating against whistleblowers for providing information to regulatory agencies, Congress, or persons with supervisory authority. It also establishes enforcement mechanisms, allowing individuals to file complaints with the Secretary of Labor and, if necessary, bring actions against employers in federal district courts.
2. How is Confidentiality Maintained?
The AML Whistleblower Improvement Act contains language to protect whistleblowers’ identities during investigations. This implies that the authorities will take measures to maintain the confidentiality of whistleblowers to the extent possible, while allowing for disclosure to law enforcement officials as necessary.
3. What Types of Activities Are Covered?
The Act covers violations of specified laws related to money laundering, namely the Bank Secrecy Act, International Emergency Economic Powers Act, the Foreign Narcotics Kingpin Designation Act, and the Trading with the Enemy Act. Covered activities could include structuring transactions to avoid reporting requirements, making false statements to financial institutions, and engaging in transactions involving proceeds of unlawful activities.
4. Are Monetary Rewards Available?
Yes, monetary rewards are available for whistleblowers reporting AML violations. These awards range between 10-30% of the monetary sanctions. These are paid from the U.S. Treasury’s Financial Integrity Fund, which is funded by sanctions collected from AML schemes. Awards may be reduced if the actions at issue are also covered by other whistleblower programs. Criteria for determining the award include the significance of the information, degree of assistance the whistleblower provided, programmatic interest of the Department of the Treasury, and additional relevant factors. Whistleblowers claiming rewards can be represented by counsel, such as the whistleblower attorneys at Tycko & Zavareei LLP.
5. How Does the Reporting Process Work?
Whistleblowers can report violations to their employer, the Secretary of the Treasury, the Attorney General, FinCEN, the Bank Secrecy Act E-Filing System.
6. What Legal Recourse Exists for Retaliation?
The Act provides robust legal recourse for whistleblowers facing retaliation. If they face retaliation, they can file complaints with the Secretary of Labor and, if necessary, bring legal action against their employer in the appropriate district court. Relief for individuals who prevail includes reinstatement, back pay, compensatory damages, and other appropriate remedies.
7. How Does the Act Interact with Existing Whistleblower Laws?
This Act adds to the existing framework of whistleblower laws, providing specific protections for those reporting violations of money laundering laws. It is designed to work in harmony with other whistleblower protection laws, reinforcing the overall legal protections for whistleblowers and providing a mechanism for rewarding whistleblowers outside of a legislative appropriation.
Money Laundering in the News
Binance Holdings Limited, operator of the world’s largest cryptocurrency exchange, pled guilty to violations related to the Bank Secrecy Act (BSA), unlicensed money transmitting, and sanctions violations. The company agreed to pay over $4 billion. Binance’s founder and CEO, Changpeng Zhao, also pled guilty to failing to maintain an effective anti-money laundering (AML) program and resigned as CEO.
The guilty plea included charges related to prioritizing growth and profits over compliance with U.S. law, allowing money to flow to terrorists, cybercriminals, and child abusers through its platform. Binance admitted to not implementing necessary controls to prevent money laundering and not filing suspicious activity reports (SAR). The company also failed to comply with U.S. sanctions laws, knowingly facilitating transactions between U.S. users and those in sanctioned jurisdictions.
As part of the resolution, Binance agreed to forfeit $2.5 billion and pay a criminal fine of $1.8 billion, totaling $4.3 billion. The company will retain an independent compliance monitor for three years and enhance its AML and sanctions compliance programs. Zhao admitted to understanding Binance’s service to U.S. users and its legal obligations yet chose growth over compliance. The investigation revealed internal communications indicating Binance’s disregard for money laundering risks, attracting illicit actors to the platform.
The Department of Justice emphasized that Binance’s violations posed a threat to the U.S. financial system and national security. The penalties imposed on Binance are among the largest in U.S. corporate history, sending a message to the cryptocurrency industry that non-compliance with U.S. law will lead to severe consequences.
Legal Resources Available for Whistleblowers
Law firms, such as Tycko & Zavareei LLP, that specialize in representing whistleblowers can assist individuals who encounter schemes perpetrated by their employers, customers, or clients to circumvent AML laws. If you would like to report violations of the Bank Secrecy Act or other anti-money laundering laws, you can contact attorneys at Tycko & Zavareei LLP. Visit our whistleblower website for a free consultation and to learn more at www.fraudfighters.net.