As we have blogged (here, here, here, here and here), the Anti-Money Laundering Act of 2020 (“the AMLA”) amended the Bank Secrecy Act (“BSA”) to expand whistleblower incentives and strengthen whistleblower protections. At a high level, the AMLA amended 31 U.S.C. § 5323 to provide that if the government recovers more than $1 million through an AML enforcement action, any qualifying whistleblower will receive a mandatory reward of up to 30% of the collected amount. Although this amendment was heralded as a major change, whistleblower attorneys and watch dog groups bemoaned the fact that there was no guaranteed monetary floor for an award (i.e., it could be zero to 30%), and that Congress had not actually provided for funding of awards.
Congress addressed these perceived deficiencies by passing the “Anti-Money Laundering Whistleblower Improvement Act” (“the Act”), which was signed into law on December 29, 2022. The Act presumably will motivate both would-be whistleblowers and the plaintiffs’ bar to pursue AML-related claims more vigorously, now that Congress has sweetened the pot.
First, the Act entitles whistleblowers to an award of between 10 and 30 percent of the value of “monetary sanctions” above $1 million collected as a result of an enforcement action (importantly, “monetary sanctions” do not include forfeiture). For “related actions” in which the whistleblower may be paid by another whistleblower award program for his or her information, awards can dip below these percentages.
Second, the Act creates a “Financial Integrity Fund” to pay for whistleblower awards, which can hold up to $300 million. The Department of Treasury can administer this fund independently of Congress, without the need for legislative appropriation. The Fund will receive monetary sanctions collected by the Secretary of the Treasury or the Attorney General through BSA enforcement, or through enforcement of certain provisions of the International Emergency Economic Powers Act, the Trading with the Enemy Act, and the Foreign Narcotics Kingpin Designation Act.
As we have blogged, the Acting Director of the Financial Crimes Enforcement Network (“FinCEN”) has emphasized the fact that FinCEN recently created an “Office of the Whistleblower,” hired “key personnel” to build and supervise the whistleblower program, and now accepts whistleblower tips while FinCEN develops a “more formal” system. Moreover, FinCEN is drafting proposed regulations to implement the AMLA’s whistleblower provisions.
The potential importance of AML whistleblowers is highlighted by the recent guilty plea entered by Danske Bank in the Southern District of New York to bank fraud, based on alleged AML failures. This massive case arose because of concerns raised by former Danske Bank employee and whistleblower Howard Wilkinson. Danske Bank was sentenced yesterday to forfeiture of $2 billion and three years of probation, with the bank to receive credit for $851 million in combined prior monetary penalties paid to the SEC and Danish criminal authorities. Ironically, the Act would not provide for a whistleblower award based on the forfeiture payment by Danske Bank.