Working for Justice

Whistleblowers Who Expose Money Laundering Schemes Are Set to Become Eligible for Sizeable Rewards

Posted June 24th, 2021 by Rob Van Someren Greve in Whistleblower Law.

On January 1, 2021, Congress overrode then-President Trump’s veto to pass the Anti-Money Laundering Act of 2020 (“AMLA”), an important new law that is designed to combat money laundering.[1] Among the provisions of the AMLA, the ban on shell companies—which, when finalized, will require most U.S. companies to report their so-called “true beneficial owner”—has received widespread media attention.[2] A part of the AMLA that has mostly flown under the radar but that may very well also prove to be highly consequential in the government’s fight against money laundering are the changes to the laws that govern whistleblowers who expose money laundering schemes.

Money laundering—that is, “the process of making illegally-gained proceeds (i.e., ‘dirty money’) appear legal (i.e., ‘clean’)”—can “facilitate crimes such as drug trafficking and terrorism, and can adversely impact the global economy.”[3] While Congress has enacted various statutes over the past fifty years that aid the federal government in its fight against money laundering, none of the laws currently on the books has fully recognized the importance of obtaining insider information in exposing money laundering schemes.[4] Until the AMLA was passed, there was a hard cap of $150,000 on the amount that Treasury can award to a whistleblower. However, much like other kinds of fraud, money laundering is by design hidden from the government’s purview, and is therefore often difficult to detect unless someone with insider knowledge blows the whistle.[5] By removing this cap, Congress has given the Treasury Department the authority to pay a much more sizeable reward to the courageous whistleblowers whose information results in a successful enforcement action, thereby making it much more likely that such insiders will come forward.

The AMLA’s revised rules governing whistleblower rewards are modeled on the highly successful program overseen by the Securities and Exchange Commission’s (“SEC”), which was created by the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010. Much like the SEC, under the AMLA, the Treasury Department will be permitted to pay whistleblowers who have provided the government with information with an award of up to 30%, whenever the government’s action has resulted in a penalty or recovery of $1 million or more.[6] In the ten year since the SEC’s program was created, the agency has recovered more than $2.7 billion in ill-gotten gains thanks to whistleblower tips, and paid more than $500 million in whistleblower awards.[7] In fact, in 2020 alone, the SEC awarded approximately $175 million to whistleblowers.

Thanks to the legislative changes contained in the AMLA, the Treasure Department will join the SEC and other federal agencies (including the Commodity Futures Trading Commission) in making robust awards available to whistleblowers who alert the government to wrongdoing. Because the AMLA sets up considerably stronger incentives for insiders to blow the whistle than those currently in place, this change will undoubtedly have a salutary effect on the government’s enforcement efforts against the scourge of money laundering.

If you believe that you may have knowledge of money laundering schemes, or other types of fraud, you may want to contact a whistleblower lawyer at our firm.

Footnotes

[1] See Pub. L. 116-283, Division F §§ 6001–6511.
[2] See, e.g., Jeanne Whalen, Congress Bans Anonymous Shell Companies After Long Campaign by Anti-Corruption Groups, Wash. Post (Dec. 11, 2020), https://www.washingtonpost.com/us-policy/2020/12/11/anonymous-shell-company-us-ban/; Pete Schroeder, U.S. Congress Bans Anonymous Shell Companies, Reuters (Dec. 11, 2020), https://www.reuters.com/article/us-usa-congress-banks/u-s-congress-bans-anonymous-shell-companies-idUSKBN28L2NV. The ban on shell companies is contained in §§ 6401–6403 of the AMLA.
[3] History of Anti-Money Laundering Laws, FinCen, https://www.fincen.gov/history-anti-money-laundering-laws (last visited Dec. 22, 2020).
[4] Laws designed to combat money laundering that are currently on the book include the Bank Secrecy Act of 1970, the Money Laundering Control Act of 1986, and the Money Laundering Suppression Act of 1994, among others. See id. From 1984 onward, whistleblower awards have been available under the Bank Secrecy Act. However, as discussed in the text, those awards are currently capped.
[5] More precisely, awards are capped at $150,000, or 25% of the net amount of the fine, penalty, or forfeiture collected, whichever is less. 31 U.S.C. § 5323(b).
[6] AMLA, § 6314 (amending 31 U.S.C. 5323).
[7] SEC, Whistleblower Program 2020 Annual Report to Congress, at p.1, https://www.sec.gov/files/2020%20Annual%20Report_0.pdf.

Rob Van Someren Greve is an Associate in the Washington, DC office of Sanford Heisler Sharp, LLP. He received his law degree cum laude from Georgetown University Law Center in 2018. He earned his undergraduate degree cum laude and Ph.D. in philosophy at the University of Amsterdam.
More About Rob

Share this Post

Categories

Tags

Archives

Back to Top