In conjunction with an omnibus spending bill, Congress passed in late December 2022, the Anti-Money Laundering Whistleblower Improvement Act, which on December 29, 2022, President Biden signed into law. This law permits whistleblowers to receive 10% to 30% of any monetary sanction the government imposes over $1 million for money laundering. Money laundering is the process of concealing the origin of illegally-obtained money – typically acquired through illicit activities such as drug trafficking, corruption, embezzlement, or gambling – by converting it to legitimate sources.
Depending on the size of the case, whistleblower awards under the new law can be substantial, running into the millions or tens of millions of dollars. Not surprisingly, these changes are aimed to incentivize whistleblowers to report wrongdoing.
In light of the new law, employers could expect to see a considerable surge in whistleblower claims against their organizations. In preparation, they should look to enhance their “speak-up” policies and other reporting channels; examine their investigation protocols; review their audit procedures to ensure there is a clear process for identifying red flags; and invest in training with respect to these types of issues. Training is especially important with respect to front-line managers who play a critical role in responding to concerns raised and ensuring that there is no subsequent retaliation as a result.
Under federal law, retaliation is prohibited against whistleblowers and can include any action that affects the terms and conditions of the employee’s employment, including discipline, reduction in pay, suspension, demotion, or termination, among other things. Several states, including New York, New Jersey, Virginia, and California have broader protections against retaliation for whistleblowers, so if an employer has employees in these states, additional efforts should be made to ensure compliance with the applicable laws.
It is important to note that the SEC and other federal agencies have taken the position that employees may be able to disclose what the employer believes is confidential information if they are doing so in the context of reporting and/or investigating unlawful conduct, such as money laundering. This appears to be the case even if the employer has internal policies strictly indicating otherwise.
