Money laundering is the process of making illegally-gained proceeds or “dirty money” appear legal or “clean”. Most large scale money laundering involves use of the legitimate banking system. Regulators and law enforcement officials need the assistance of insiders to identify and unravel sophisticated money laundering networks.
Recognizing the importance of those insiders, Congress passed the Anti-Money Laundering Act (AMLA) of 2020. Among other provisions, the AMLA created a program to pay awards to whistleblowers who reported money laundering activities to the federal government. The AMLA was a significant improvement over previous laws. But the AMLA had loopholes which made it uncertain how and how much whistleblowers would be paid.
In response, the Senate recently passed the Anti-Money Laundering (AML) Whistleblower Improvement Act. This bipartisan legislation beefs up the existing Anti-Money Laundering Whistleblower Program. The Act is good for whistleblowers because it sets a minimum award amount, provides a funding vehicle for payment of awards, and would be available to whistleblowers who report sanctions violations.
The AML Whistleblower Program
The AMLA strengthened existing whistleblower protections and updated incentives for individuals who exposed violations of the Bank Secrecy Act. The AMLA provides:
- Whistleblower rewards of up to 30% of the amount recovered by the U.S. Treasury exceeding $1 million;
- Confidentiality for the whistleblower; and
- Protection from retaliatory actions against the whistleblower.
AML Improvement Act Sets A Minimum Award Amount
The first significant proposed update to the AMLA is the establishment of a statutory minimum award. Whistleblowers would be entitled to an amount of at least 10% of the sanctions collected as a result of the whistleblower’s tip. Currently, AMLA whistleblower award amounts are fully discretionary. So, with no guarantee of a meaningful reward amount, individuals may be unwilling to take the risk of blowing the whistle. A guaranteed minimum award should embolden more whistleblowers to come forward.
Creates A Funding Mechanism For Whistleblower Award Payments
Presently, the AMLA relies on Congressional appropriations to fund awards to whistleblowers. The proposed legislation, however, establishes a fund financed through sanctions paid by AML violators, as the source of award payments.
Whistleblowers Would Be Covered For Reporting Sanctions Violators
If enacted, the AML Improvement Act would also expand the reach of the AML Whistleblower Program. The new legislation would afford protections to and awards for those who blow the whistle on sanctions violators.
I’m optimistic that our new program encouraging individuals to come forward for suspected sanctions violations will be successful as well. Given the expansive sanctions we’ve implemented on Russia as they wage an unjust war in Ukraine, our legislation is urgently needed to hold bad actors accountable.
Statement of Senator Chuck Grassley in support of AML Improvement Act.
Next Steps For The Act
At this time, the AML Whistleblower Improvement Act is still not final. Although, the U.S. Senate voted unanimously to pass the bill, the Chair of the House Appropriations Committee, still needs to sign off on the bill before it can proceed to the House for a final vote.
We Help Whistleblowers File Successful Claims
Whistleblower Law Collaborative LLC, based in Boston, devotes its practice entirely to representing clients nationwide in bringing actions under the federal and state whistleblower laws and programs, including the AML Whistleblower Program. If you are aware of AML violations or other types of fraud, contact us for a free, confidential consultation.
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