New Treasury Department Whistleblower Reward Program Targets Foreign Corruption

Jones Day

The Kleptocracy Asset Recovery Rewards Act ("KARRA") authorizes a U.S. Treasury Department ("Treasury") pilot program aimed at rewarding whistleblowers who provide information leading to the restraint, seizure, forfeiture, or repatriation of assets held in U.S. financial institution accounts that are derived from foreign government corruption.

On January 1, 2021, the Senate joined the House of Representatives in overriding the president's veto of the National Defense Authorization Act, which provides for KARRA. KARRA creates a three-year whistleblower program aimed at detaining "stolen assets"—that is, funds traceable to foreign government corruption—that are held at U.S. financial institutions and found in the United States or in the possession of U.S. persons. Under KARRA, Treasury may award up to $5 million to anyone who provides information leading to the restraint, seizure, forfeiture, or repatriation of such "stolen assets." KARRA also allows Treasury to take measures to protect the whistleblower and his/her family. However, it makes any domestic or foreign government employee who "whistleblows" as part of his/her duties ineligible for a reward and allows Treasury to reduce or deny a reward to a whistleblower who facilitated the underlying corrupt act.

Although KARRA lays out a framework for its whistleblower program, many questions remain. For instance, KARRA defines "foreign government corruption" by referring to use of the term "corruption" in the United Nations Convention Against Corruption, but that treaty provides no definition of the same. Additionally, KARRA does not specify what it means for information to "lead to" the detention of "stolen assets" nor does it provide guidance on award amounts or minimums. Such general provisions may provide flexibility given that KARRA authorizes awards based on the "restraint" or "seizure" of stolen funds, which can be temporary in nature. Last, unlike the whistleblower programs under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), KARRA does not contain confidentiality or anti-retaliation provisions.

KARRA's whistleblower program is one of many targeting corruption and financial crimes—including the Dodd-Frank Act's programs for reporting to the Securities and Exchange Commission and the Commodities Futures Trading Commission, state whistleblower programs modeled after the Dodd-Frank Act, and the whistleblower program contemplated in the Anti-Money Laundering Act of 2020. In light of KARRA's incentives, companies should consider updating their anti-corruption policies and procedures and take prompt action to investigate any internal reports related to the proceeds of foreign government corruption.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jones Day | Attorney Advertising

Written by:

Jones Day
Contact
more
less

Jones Day on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.