Federal law enforcement agencies including the Financial Crimes Enforcement Network (FinCEN) and U.S. Department of Justice (DOJ) rely heavily on whistleblowers to help them uncover violations of the Bank Secrecy Act (BSA) and other federal anti-money laundering (AML) statutes. Whistleblower complaints can assist these agencies with taking judicial or administrative action, and these actions can lead to monetary sanctions and other penalties.
Under federal BSA/AML whistleblower policy, individuals who report sanctions violations, compliance program failures, and other AML-related violations are entitled to strong confidentiality protections and protection against retaliation. They may also be entitled to whistleblower rewards in some cases. These provisions are intended to incentivize whistleblowers to come forward—underscoring federal authorities’ reliance on whistleblowers to take action when warranted.
“Blowing the whistle on an AML violation constitutes protected activity under federal law. This means that employees alleging misconduct are entitled to protection against retaliation by their employers; and, when AML whistleblowers experience retaliation in violation of their legal rights, they can seek back pay, reasonable attorneys’ fees, and other remedies.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.
The Bank Secrecy Act (BSA) is just one of several laws that contain whistleblower provisions pertaining to AML compliance and enforcement. This article provides an overview of the federal AML laws and policy, current federal AML programs, and what prospective BSA/AML whistleblowers need to know when deciding whether to come forward.
Federal Anti-Money Laundering (AML) Whistleblower Program
The Financial Crimes Enforcement Network (FinCEN) holds primary responsibility for administering the federal government’s AML whistleblower program. FinCEN is a part of the U.S. Department of the Treasury, and it works alongside the U.S. Department of Justice (DOJ) to enforce the various laws and federal regulatory requirements that are designed to protect the integrity of the U.S. financial system while also incentivizing domestic and international whistleblowers to come forward.
Under the federal AML whistleblower program, individuals who have information that they believe constitutes evidence of a violation of the BSA and any other federal AML law or regulation can come forward confidentially and work with the government to seek accountability. In such cases, Congress has made clear—through the AML Whistleblower Improvement Act and other laws—that protecting and incentivizing whistleblowers is a key policy consideration.
Importantly, to secure protection as an AML whistleblower, individuals who come forward must meet substantive, timing, and other requirements. For example, AML whistleblowers must generally be able to provide “original information” about facts material to a prosecutable violation. AML whistleblowers must also generally come forward before the government initiates an investigation into the matter in question. For individuals who are thinking about coming forward, consulting with an experienced AML whistleblower lawyer is a key first step toward assessing their eligibility and making informed decisions about their next steps.
Filing an AML Whistleblower Lawsuit Under the False Claims Act
While reporting compliance violations, fraud, or other unlawful conduct often involves coming forward under the federal AML whistleblower program, AML whistleblowers can also file lawsuits under the False Claims Act in some cases. The False Claims Act also provides strong protections to whistleblowers, and whistleblower awards are available in False Claims Act cases as well.
The False Claims Act broadly prohibits the submission of false or fraudulent claims to the federal government. Financial institutions, credit unions, and other entities that receive federal funds or federal backing must generally certify compliance with all applicable federal laws and regulations—and, if they cannot (or if they do so fraudulently), this can amount to a “false claim.” Filing a whistleblower lawsuit is a very different process from filing a complaint under FinCEN’s AML whistleblower program; and, here too, experienced legal representation is essential.
Due to its breadth (and the steep penalties it imposes), the False Claims Act is a potent weapon in the federal government’s fight against AML violations, fraud, and other financial crimes. In False Claims Act cases, the DOJ can seek fines and other appropriate remedies, and financial institutions and other entities can face liability far in excess of what they might otherwise face in an AML-specific enforcement proceeding.
Confidentiality and Anti-Retaliation Protections for AML Whistleblowers
Under both FinCEN’s AML whistleblower program and the whistleblower provisions of the False Claims Act, individuals who meet the pertinent requirements for coming forward are entitled to strong confidentiality protections. Individuals who come forward under FinCEN’s AML whistleblower program also have the option of doing so anonymously if they have legal representation. In AML whistleblower cases, FinCEN and the DOJ can only disclose whistleblowers’ identities in limited circumstances; and, in the vast majority of cases, whistleblowers’ identities will remain undisclosed.
In the event that an AML whistleblower’s employer discerns his or her identity, the employer is strictly prohibited from engaging in any form of retaliation. Blowing the whistle is a clear form of protected activity, and this means that retaliation against AML whistleblowers is clearly prohibited. If employers retaliate against employees who blow the whistle in violation of federal law, they can (and should) be held fully accountable in federal court. In the post-employment scenario, employers are prohibited from disparaging former employees with prospective employers and retaliating in any other manner as well.
Financial Award Eligibility in AML Whistleblower Cases
Financial awards are also available to eligible whistleblowers under FinCEN’s AML whistleblower program and the whistleblower provisions of the False Claims Act as well. FinCEN maintains a Financial Integrity Fund to compensate whistleblowers, while the DOJ pays whistleblower awards out of the monetary sanctions it recovers through False Claims Act enforcement proceedings. In all cases, whistleblower awards are calculated as a percentage of the amount the government recovers, and this percentage is based, in part, on the whistleblower’s level of cooperation and involvement.
5 Key Facts for Potential Whistleblowers Under the Bank Secrecy Act (BSA) and Anti-Money Laundering Act (AMLA)
With this overview of federal AML whistleblower policy in mind, what do you need to know if you are considering coming forward under the Bank Secrecy Act, Anti-Money Laundering Act, False Claims Act, or any other pertinent law or regulation? Here are five key facts for prospective BSA/AML whistleblowers:
1. Whistleblowers Can Report Violations Committed By Financial Institutions and Other Entities
Whistleblowers can report BSA/AML violations committed by financial institutions, credit unions, and a wide range of other entities. Ultimately, if you believe that you have information about any violation of any federal AML-related requirement or prohibition, it will be worth talking to an experienced whistleblower lawyer to ensure that you are making informed decisions about what to do with the information you have in your possession.
2. Prospective Whistleblowers Must Be Careful When Considering Internal Reporting
Many employers have policies that require employees who are aware of unlawful practices to report internally. However, reporting internally can be risky in some cases, and prohibitions on reporting unlawful practices to federal authorities may themselves be unlawful. As a result, it is important for prospective whistleblowers to ensure that they are making informed decisions about their next steps—and, here too, an experienced AML whistleblower attorney can help.
3. Whistleblowers Must Provide Information the Government Hasn’t Uncovered Through an Existing Investigation
Generally, to qualify as an AML whistleblower, an individual must come forward with information that the federal government hasn’t already uncovered through an existing or ongoing investigation. Of course, if you are thinking about blowing the whistle, you won’t necessarily know what information the federal government has in its possession. An experienced AML whistleblower attorney will be able to assist here as well. Before you come forward, your attorney can contact the appropriate federal authority on your behalf to determine if you are eligible for protected whistleblower status.
4. Whistleblowers Can Assist Federal Authorities with Pursuing Both Civil and Criminal Enforcement Actions
While many AML violations are civil in nature, AML violations can also warrant criminal prosecution in some cases. AML whistleblowers can report both civil and criminal violations, and they can work with the government to seek accountability and justice based on the scope and nature of the violation (or violations) at issue. When coming forward, AML whistleblowers do not necessarily need to know whether they have information about a civil or criminal violation—although an experienced AML whistleblower attorney will be able to assess what type of enforcement action the government is likely to pursue.
5. Hiring an Attorney to Help You Make Informed Decisions as a Prospective AML Whistleblower Costs Nothing
When you are thinking about serving as an AML whistleblower, it costs nothing to hire an attorney to help you make informed decisions. You can schedule a free and confidential consultation; and, if you decide to move forward, you can hire an attorney to represent you on a contingency-fee basis. In some cases, financial institutions and other entities held liable for BSA/AML violations can be held separately liable for whistleblowers’ legal fees as well. Since talking to an experienced attorney costs nothing, there is no reason for prospective whistleblowers not to seek legal advice before deciding how to proceed.
