The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury with a focus on detecting and combating fraud and other illegal acts in the banking industry, including through enforcement of the Bank Secrecy Act (BSA) and Anti-Money Laundering Act (AML).
Whistleblowers who report violations of these laws, including “sanctioned entity” violations, are eligible for financial awards from 10% to 30% of the monetary sanctions collected as a result of the information they provide.
While Hagens Berman had been handling whistleblower cases for decades, long before the 2010 passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, that law’s enactment proved to be a game-changer in the area of financial fraud.
After Dodd-Frank was passed, SEC and CFTC whistleblowers were properly protected from retaliation, given anonymity protection, and incentivized by potentially lucrative rewards in the event of a successful enforcement action by the government. Hundreds of millions of dollars have been awarded to whistleblowers since the Dodd-Frank programs were enacted.
A decade after the passage of Dodd-Frank, in late 2020, Congress enacted another piece of landmark legislation, aiming to similarly protect and incentivize whistleblowers who report on money laundering and other unlawful banking activity. Part of the National Defense Authorization Act and overseen by the Department of the Treasury, the Anti-Money-Laundering Act (AML) is, as the Associated Press put it, “the most sweeping banking reform of its kind since passage of the Patriot Act in the aftermath of the Sept. 11, 2001, terrorist attacks.”
In fact, financing for terrorists is one area the AML is designed to clamp down on, as it has the effect of expanding the Bank Secrecy Act into the area of national security. Whereas it used to be relatively easy for just about anyone to set up shell companies that concealed the identities of their owners or beneficiaries, the AML requires these companies to disclose the identities of their true owners, or face stiff penalties should they choose to ignore the regulations.
“Like the Dodd-Frank whistleblower programs that began a decade ago, this whistleblower program has been similarly transformative,” says Shayne Stevenson, Head of Hagens Berman’s Whistleblower Practice. “We have clients both in the U.S. and internationally who assisted law enforcement in its enforcement of our banking laws, including for violations of sanctions regime prohibitions and anti-money-laundering laws.”
Importantly, this whistleblower program incorporates within its ambit the enforcement of several federal laws, including the Trading with the Enemy Act, that prohibit corporations and others from doing business with sanctioned entities—violation of which can result in criminal prosecution. And information about which, from a whistleblower, can lead to enforcement action and a resulting award to the whistleblower.
Rewards for Anti-Money Laundering Whistleblowers
Hagens Berman has a lengthy track record of whistleblower victories, resulting in multimillion-dollar rewards for individual clients who have blown the whistle under the False Claims Act, as well as the SEC and CFTC whistleblower programs. But prior to the passage of the Anti-Money Laundering Act, whistleblowers who reported violations of the Bank Secrecy Act were only able to receive a maximum reward of $150,000.
The AML completely transformed the incentives and protections for anti-money laundering whistleblowers. Similar to the whistleblower programs of the SEC and CFTC, money laundering whistleblowers are now able to receive up to 30% of the total monetary penalty collected for a Bank Secrecy Act violation, based on the significance of the whistleblower’s information and provided that the penalty exceeds $1 million. Considering the vast financial resources typically available to global money launderers and the banks and other financial agents who enable them, AML forfeitures are often significant, giving whistleblowers the financial incentive they need to blow the whistle on money laundering in the United States and beyond.
To that end, a whistleblower doesn’t need to be an American citizen or resident to report money laundering to the U.S. government and collect a reward in the event of a successful legal action. And the laundering doesn’t have to occur in the U.S.; it just needs to be in some way related to an American company or financial institution. Money laundering is often an international racket involving countries with banking and financial regulations that make it far too easy to wash ill-gotten gains, whether they come in the form of traditional money, cryptocurrency, or even high-end works of art. With the AMLA, the hope is that it will make it much harder to commit these crimes, with protected whistleblowers standing to benefit from their bravery in reporting money laundering activities.
Protections for Anti-Money-Laundering Whistleblowers
As with other whistleblower laws, it is always in a whistleblower’s best interest to consult an attorney before reporting an act of money laundering or related fraud. Among the many good reasons to do so, retaining counsel allows the whistleblower to maintain their anonymity as the case is being investigated and potentially litigated. By consulting with experienced whistleblower counsel at Hagens Berman, potential whistleblowers can maximize their protections and explore as many options as possible, including joint submissions to the Department of Justice, the SEC, and other agencies.
Remaining anonymous is often an attractive proposition for whistleblowers due to the potential for employer and industry-wide retaliation. But it’s important to know that the Anti-Money Laundering Act also bars employers from retaliating against whistleblowers. Prohibited activities include demoting, suspending, firing, blacklisting or harassing an employee for shedding light on financial wrongdoing – even if the employee reports the issue internally before considering other legal options. Should an employer choose to violate this provision, the whistleblower is entitled to reinstatement, double back pay, and other compensatory damages — provided they first file a complaint with the Department of Labor, which the law requires.
Tips for Anti-Money-Laundering Whistleblowers
Similar to Dodd-Frank and the SEC and CFTC whistleblower programs created by that law, the government must decide to take on an anti-money laundering whistleblower’s case for it to proceed. Since the government has finite resources, it tends to be very selective in choosing which whistleblower cases to pursue, which puts preparation and experience at a premium. Unlike most whistleblower practices, Hagens Berman has experience in litigating international financial fraud and the resources and wherewithal to see a whistleblower case through to a successful result.
Once a potential whistleblower becomes aware of information regarding money laundering activity committed by their employer or another company (whistleblowers are not restricted to reporting on their employer), it is imperative to speak first with experienced counsel. Timing is of the essence. Being the first to report new information to the government – and the information must be “original” – increases the likelihood that the government will investigate the whistleblower complaint. Conversely, if whistleblowers delay reporting, they run the risk of someone else reporting the same information first and better positioning themselves for a reward in the event of a successful legal action.
Top Whistleblower Law Firm
Whistleblower laws can be complex, and the FinCEN whistleblower program is no exception, so consulting an experienced attorney with the reputation and resources to work with the government on behalf of whistleblowers early on is always your best option. Should you choose to contact a member of Hagens Berman’s whistleblower team, you will receive expert advice without having to pay anything up front. Hagens Berman’s experienced whistleblower attorneys work on contingency, meaning they collect no fees unless a successful legal action is achieved. And Hagens Berman chooses its cases carefully, ensuring that the firm’s clients get the attention they deserve and increasing the likelihood of a positive – and potentially lucrative – resolution.
How to Become a Whistleblower
If you know of a specific act of money laundering and would like to consider becoming a whistleblower and discuss your legal rights and protections, contact our whistleblower team at [email protected] or by filling out the secure form on this page.
