As we have blogged, the Anti-Money Laundering Act of 2020 (“AMLA”) amended the Bank Secrecy Act (“BSA”) to expand greatly the options for whistleblowers alleging anti-money laundering (“AML”) violations and potentially create a wave of litigation and government actions, similar to what has occurred in the wake of the creation of the Dodd-Frank whistleblower
Whistleblower
United Nations Targets Corruption and Illicit Cross-Border Finance
U.N. Report Focus on Improving Accountability, Transparency and Good Governance
On March 2, 2020 the United Nations released a Report on Financial Integrity For Sustainable Development (the “Report”). Although the Report is lengthy and wide-ranging, we will focus here on the portions of the Report which target the humanitarian toll of Illicit Financial Flows (IFFs) from money laundering, tax abuse, cross-border corruption, and transnational financial crime – all of which can drain resources from sustainable development, worsen inequality, fuel instability, undermine governance, and damage public trust. We also will focus on the portions of the Report which make recommendations designed to expand anti-money laundering (“AML”) compliance.
First, the Report makes evidence-based recommendations focused on accountability, designed to close international enforcement and compliance gaps. Those recommendations include: (i) all countries enacting legislation providing for the widest range of legal tools to pursue cross-border financial crime; (ii) the international community developing an agreed-upon international standard for settlement of cross-border corruption cases, and (iii) businesses holding accountable all executives, staff, and board members who foster or tolerate IFFs in the name of the business.
Second, the Report makes other recommendations on several AML-related issues on which we have blogged: (i) each country creating a central registry of beneficial ownership information for legal entities; (ii) creating global standards for professionals, including lawyers, accountants, bankers and real estate agents; (iii) improving protections for human rights defenders, anti-corruption advocates, investigative journalists and whistleblowers; and (iv) promoting the exchange of information internationally among law enforcement officers and other authorities.
The Report clearly envisions that corporations can and should play a pivotal role in contributing resources in the fight against corruption, money laundering and cross-border financial crime. To start, Boards and management, particularly those of financial and professional service institutions, must engage in oversight to ensure that compensation, benefits, and employment itself are contingent upon financial integrity. Investors also should embrace financial integrity for sustainable development and be clear with the companies in which they invest that they expect effective anti-corruption policies and regulatory compliance. Integrity will be cultivated when organizational leadership hold board members, executives, and staff accountable if they foster or tolerate IFFs in the name of the business. Moreover, the Report observes that governments can foster financial integrity by imposing liability for failing to prevent bribery or corruption.
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The New BSA Whistleblower Provision – From the Whistleblowers’ Perspective. A Guest Blog.
As we have blogged, the Anti-Money Laundering Act of 2020 (“AMLA”) amended the Bank Secrecy Act (“BSA”) to expand greatly the options for whistleblowers alleging anti-money laundering (“AML”) violations and potentially create a wave of litigation and government actions, similar to what has occurred in the wake of the creation of the Dodd-Frank whistleblower program.
We thought it would be valuable to learn how counsel for potential whistleblowers regard the AMLA and its implications. We therefore are very pleased to welcome to Money Laundering Watch guest bloggers Mary Inman and Carolina Gonzalez of the law firm Constantine Cannon.
Ms. Inman is a partner in the London and San Francisco offices of Constantine Cannon. After 20+ years representing whistleblowers in the U.S., she moved to London in July 2017 to launch the firm’s international whistleblower practice, and she now splits her time between the London and San Francisco offices. She specializes in representing whistleblowers from the U.S., U.K., Europe and worldwide under the American whistleblower programs, including the federal and various state False Claims Acts and the Securities and Exchange Commission (“SEC”), Commodity Futures Trading Commission (“CFTC”), Internal Revenue Service (“IRS”), Department of Transportation (“DOT”) and new Treasury Department BSA whistleblower programs. Ms. Inman’s efforts to export the American whistleblower programs to the U.K., including her efforts on behalf of a successful British whistleblower, were featured in a recent New York Times article “Law Firm Sees Britain as Hunting Ground for U.S. Whistleblower Cases.” Her successful representation of three whistleblowers exposing fraud in the Medicare Advantage program was featured in the February 4, 2019 issue of the New Yorker magazine in an article entitled “The Personal Toll of Whistle-Blowing.” Ms. Inman represents renowned whistleblower Tyler Shultz who exposed the now infamous Silicon Valley blood testing start-up Theranos, and regularly speaks on lessons to be learned from this scandal.
Ms. Gonzalez is a senior associate in Constantine Cannon’s London office and a member of the firm’s International Whistleblower practice. She represents international whistleblowers under various U.S. and non-U.S. whistleblower reward programs. Her practice focuses on financial services fraud, foreign corruption, and money laundering. Carolina is heavily involved in developing various practice initiatives in emerging markets like Latin America, Africa, and the Middle East.
This blog post again takes the form of a Q & A session, in which Ms. Inman and Ms. Gonzalez respond to questions posed by Money Laundering Watch about the BSA’s new whistleblower provision. We hope you enjoy this discussion regarding this important new development, and how it is regarded by potential whistleblowers and their counsel. – Peter Hardy and Meredith Dante
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OSHA to Investigate Retaliation Complaints Under Money Laundering and Criminal Antitrust Laws
The Occupational Health and Safety Administration (“OSHA”) now will investigate workers’ complaints of retaliation for reporting alleged money laundering and antitrust-related violations under new whistleblower statutes. On February 19, 2021, the Department of Labor announced that OSHA would oversee whistleblower claims alleging retaliation under two laws – the Anti-Money Laundering Act of 2020 (“AMLA”) and
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AMLA Adds Robust New Whistleblower Provisions for Anti-Money Laundering Violations
The AMLA Creates a Significant New Source of Risk for Financial Institutions
Second Blog Post in an Extended Series on Legislative Changes to the BSA/AML Regulatory Regime
As we have blogged, the Anti-Money Laundering Act of 2020 (the “Act”) (part of the National Defense Authorization Act (“NDAA”), passed on January 2, 2021), represents a historic overhaul of the Bank Secrecy Act (“BSA”). One of the most important changes – and certainly one that has attracted great attention by the media and commentators – is Section 6314 of the NDAA, entitled “Updating whistleblower incentives and protections.” The Act’s expanded whistleblower provision is modeled after the Dodd-Frank Act’s whistleblower provisions, and seeks to follow in Dodd-Frank’s footsteps. But, there are some key differences between the Act and Dodd-Frank. The Act also creates a more limited whistleblower program specifically pertaining to foreign corruption.
Aside from expanding the potential monetary rewards, the most significant aspect of the Act is that it explicitly invites internal compliance officers of financial institutions to use the information obtained through their compliance functions in order to pursue a whistleblower reward. This provision highlights the tension between individuals and institutions, and increases the pressure on financial institutions to comply with the law, take whistleblowers seriously, and be ready to deal with employees who purport to be whistleblowers but may be pursuing their own agenda. It also is a prudent time for financial institutions to review their internal complaint procedures and assess whether any changes are warranted given this new development.
Continue Reading AMLA Adds Robust New Whistleblower Provisions for Anti-Money Laundering Violations
Massive BSA/AML Reform Legislation Released by U.S. House and Senate Committees for Passage — But Still Subject to Potential Presidential Veto
On December 3, the U.S. House and Senate Armed Services Committees reached an agreement on the National Defense Authorization Act (“NDAA”), an annual defense spending bill. Within this huge bill (well over 4,500 pages) are widespread changes to the Bank Secrecy Act (“BSA”), coupled with other related changes dealing with money laundering, anti-money laundering (“AML”),…
Wirecard: A Scandal
“Germany’s Enron” Continues to Stagger Forward
It’s time to talk about Wirecard AG. In many respects, it’s yet another accounting fraud scandal – albeit a massive one. But now, inevitably, it also has become a money laundering scandal, courtesy of German law enforcement authorities – and also now U.S. authorities – which are looking into the alleged misuse of shell companies to facilitate the pursuit of pornography, gambling and marijuana distribution. And it’s a story that clearly will be with us for some time, like the Danske Bank disaster. We surely will be blogging on this scandal going forward.
The fallout from the massive, years-long accounting scandal involving Wirecard, the German-based fintech giant, recently has blossomed to implicate alleged money laundering failures by the company and even systemic failures on the part of German regulatory authorities. Wirecard, a payment processor publicly valued more than some of the world’s largest banks, has been in a free-fall since a bombshell report by the Financial Times (“FT”) on February 7, 2019 revealed Wirecard’s widespread accounting fraud after being tipped off by a whistleblower.
As with the Dankse Bank scandal, a whistleblower allegedly was instrumental in causing the financial house of cards to collapse. This is also a story of investigative journalism and its consequences. Please check out this YouTube video by a FT reporter describing the efforts by himself and his colleagues to investigate Wirecard, and what he believed occurred as a result.
This June, Wirecard filed for insolvency and disclosed that it owed creditors almost $4 billion and that 1.9 billion euros – two-thirds of the company’s 2019 revenue – was missing from its accounts. In an effort to calm investors, Wirecard announced earlier this month that James Freis – previously the director of the Financial Crimes Enforcement Network (“FinCEN”) – would serve as the new CEO just after German authorities arrested Wirecard’s longstanding CEO, Markus Braun, for his alleged role in the scandal. Wirecard initially hired Fries as a Compliance Officer but, in a shocking turn of events, appointed him as interim CEO the very next day.
Despite these efforts, Wirecard’s legal troubles continue to grow and new reports emerged last week implicating the company in various money laundering schemes entirely unrelated to the accounting fraud. In an even stranger twist: with the details of both scandals emerging, the spotlight has turned to the alleged inaction of Germany’s regulatory authorities – putting aside the issue of Wirecard’s own auditors – and how they can and should prevent future scandals.
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Would-Be Whistleblower Fails to Show Causation Under the Bank Secrecy Act for Termination
The Southern District of New York (“SDNY”) recently rejected a retaliation claim brought by a former bank employee under the Bank Secrecy Act (“BSA”), granting summary judgment in favor of the employer bank because the former employee failed to demonstrate that his firing was caused by his act of reporting a potential violation of law to the government. Although the reasoning underlying the Court’s Order is straight-forward, the case provides another reminder of the often difficult employment issues that both financial institutions and potential whistleblowers can face.
Whistleblowing as to alleged anti-money laundering (AML) violations is a growing phenomenon, perhaps best exemplified by the fact that a whistleblower precipitated the colossal Dankse Bank money laundering scandal. Previously, we blogged about a bank whistleblower case producing the opposite result as the SDNY Order here. In this post, we discuss both the BSA whistleblower statute and the SDNY Order, and, more generally, we note steps that financial institutions might take to protect themselves from liability and legitimate whistleblowers from retaliation.
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Former Bank General Counsel Enters into Consent Order Over Alleged AML Obstruction
The Office of the Comptroller of Currency (“OCC”) issued an extraordinary announcement regarding the decision of a former bank general counsel – Daniel Weiss, formerly employed by Rabobank, N.A. – to enter into a Consent Order in which Mr. Weiss agreed to be barred from the banking industry and pay a $50,000 fine. The Consent…
Proposed Kleptocracy Asset Recovery Rewards Act Adds Whistleblower Incentives and Protections
Proposed Legislation Creates Rewards Program for Whistleblowers of Foreign Government Corruption
Third Post in a Three-Post Series
Newly proposed legislation, if passed, will authorize a whistleblower program for individuals providing law enforcement with information leading to the seizure, forfeiture, and/or repatriation of foreign stolen assets that come within the possession or control of any United States person.
In early March, the House Financial Services Committee released three proposed bills to codify many of the suggested reforms discussed during ongoing conversation among financial agencies, law enforcement, financial institutions, and commentators regarding the Bank Secretary Act (“BSA”) and Anti-Money-Laundering (“AML”) and Combating the Financing of Terrorism (“CFT”) laws. The first two proposed bills are discussed here and here.
In this post, we summarize the last of the three proposed bills, The Kleptocracy Asset Recovery Rewards Act (the “Bill”). The Bill allows the Department of Treasury to provide whistleblowers not only with monetary incentives but also protective measures, including asylum for the whistleblower and his or her immediate family. As we will discuss, the Bill proposes a unique whistleblower program focused on foreign corruption, and which differs in important ways from other, established government whistleblower programs.
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