On January 1, 2021, Congress passed the AML Whistleblower Act, which authorized the Departments of Justice and Treasury to accept confidential and anonymous complaints worldwide regarding the most significant international corruption issue: money laundering and violations of Bank Secrecy. In December, 2022, after a two-year campaign spearheaded by the NWC, we obtained unanimous support in the U.S. Senate and in the House Financial Services Committee, and through the largest grassroots campaign ever undertaken to force congress to enact effective whistleblower laws, the AML whistleblower enhancement act was attached to the federal budget as the last law passed in the 117th congress.
This was a tremendous victory for whistleblowers and the worldwide fight to weed out corruption facilitated by the largest and most powerful banks in the world. Since these victories were achieved, the Department of Justice and Treasury have been stonewalling and delaying the enactment of the regulations necessary for these laws to become effective. For example, after over two years, neither department has procedures for whistleblowers to file anonymous cases even though this is required by the law.
We need you to join our campaign to demand that the Departments of Justice and Treasury enact effective regulations unleashing the recognized power of whistleblowers worldwide to report terrorist financing, drug cartels, illegal profiteering by the largest banks in the world, embezzlement, and other forms of money laundering. Read about our Priorities below.
Priority I. Ensure that the process for qualifying as a whistleblower aligns with U.S. anti-corruption priorities:
FinCEN’s final regulations should fulfill the mandate of the United States Strategy on Countering Corruption. In doing so, it must acknowledge, protect, and incentivize corruption-reporting as Identified in the OECD follow-up Phase IV audit report of the FCPA whistleblowing program. Relying on DOJ statistics, the OECD identified the following major sources of information related to international corruption: (a) Whistleblowers constitute 40% of reports – this would include persons who report to a wide variety of agencies or sources, not to formal federal whistleblower programs; (b) news media – which constitute 20% of reports; (c) civil society and international law enforcement – which constitute 20% of reports; (d) internal reports resulting in corporate self-reports – which constitute approximately 10% of reports. Given these strategic priorities and having witnessed both the strengths and weaknesses of existing regulations in other federal whistleblower programs, NWC calls on FinCEN to take the following into account when promulgating its regulations for the AML Whistleblower program:
(1) Allow whistleblowers identified in case investigations to be eligible for rewards, rather than by mandating technical form requirements for whistleblower reward eligibility:
(2) Maintain the standard conditions for qualifying as a whistleblower, but expand the definition of “Voluntary” to its standard definition.
However, the SEC’s unnecessarily prohibitive definition of “voluntarily provided” must not be duplicated in FinCEN’s final regulations. The final regulations should define the term “voluntary” based on its ordinary meaning, as set forth in the Oxford dictionary. The regulations should explicitly state that a whistleblower would be considered voluntary if a request for information (including a subpoena) from the Department of Justice or Treasury – or another federal agency – follows a voluntary report/tip to any of the following sources:
– Any federal law enforcement or regulatory agency;
– A state regulatory or law enforcement agency;
– An international regulatory or law enforcement agency; an “anti-corruption” agency;
– The news media;
– An investigative journalist;
– Civil society organizations that thereafter report the whistleblower’s information to the media or a governmental organization;
– Other human rights defenders as understood by the Department of State or Agency for International Development.
(3) Ensure that critical whistleblowers have the right to make use of the AML Whistleblower Program:
(a) mimic the SEC’s regulations in prohibiting non-disclosure agreements or other contractual terms that interfere with whistleblowers’ rights to report;
(b) expand the definition of “analyst” to encourage representatives of civil society to assist whistleblowers in submitting information;
(c) NOT subject Foreign government officials to a blanket prohibition on obtaining a reward, as seen in other federal whistleblower programs. Prohibitions should exclude members of anti-corruption committees and persons working within government-owned banks or other agencies, such as doctors working in a state health care program, and persons working in sectors of the economy that are usually managed by the private sector in capitalist societies.
Priority II. Protect Whistleblowers
Whistleblower advocates and anti-corruption advocates share a common interest in protecting the confidentiality of whistleblowers and combatting whistleblower retaliation. Whistleblower programs only work well when whistleblowers trust that they can use them safely, without risking their physical well-being or financial stability. Therefore, the deterrent effect and anti-corruption potential of the AML whistleblower program will only be maximized if the regulations do the most to shield whistleblowers from retaliation and protect their confidentiality and anonymity.
(1) Secure the Confidentiality & Anonymity of AML whistleblowers in ALL ongoing Federal investigations involving their disclosers:
(2) Establish Consistent Inter-Agency Protocol with respect to Whistleblowers who have participated in crime:
(3) Do not Incentivize – and absolutely do not require – Internal Reporting prior to filing AML claims with FinCEN, but ensure that those who file internally first maintain award eligibility.
However, FinCEN’s final regulations should not incentivize whistleblowers to report internally, as the current SEC whistleblower regulations do. Such incentives could cause employees who work for institutions insured by the Federal Deposit Insurance Corporation (FDIC) and/or who work for credit unions to lose protection against retaliation, as they are excluded by the anti-retaliation provisions in the AML Whistleblower Improvement Act. In other words, banks and credit unions can fire AML whistleblowers. The veil of anonymity guaranteed by reporting directly to FinCEN is the only way to protect their identities from being disclosed to their companies.
Likewise, international whistleblowers are not protected by any U.S. laws prohibiting retaliation, including the obstruction of justice laws and/or state common law remedies that may be applicable to workers in the United States. It is well documented that the current state of international whistleblower laws is extremely problematic.
Since constituencies that will likely contribute to a large proportion of AML whistleblower tips would be put at risk by reporting internally, FinCEN’s regulations should not incentivize internal reporting through mechanisms used by the SEC, such as increasing the ultimate reward.
Priority III. Ensure that whistleblowers are fully compensated in a timely manner
The unique success of U.S. whistleblower programs stem from the high rewards, which incentivize whistleblowers who are risking it all to step forward with valuable information. The risk evaluation by whistleblowers, however, depends on the awards program genuinely compensating whistleblowers as promised in a timely manner.
(1) Give full force to related action provisions:
(2) Do NOT place a cap on whistleblower rewards:
(3) Establish and abide by a strict deadline for paying awards:
- Letter from NWC Chairman Steve Kohn to Federal Agencies (10/20/23)
- AML Whistleblower Program Rules Seen as Key in Global Fight Against Corruption (8/1/23)
- Stephen Kohn explains in Columbia Law School Blog why Treasury Should Keep Global Anti-Corruption Efforts in Mind When Drafting Whistleblower Regulations (7/31/23)
- Fighting Transnational Corruption: Why the Treasury Department Must Make Awards More Accessible to Whistleblowers in its AML Whistleblower Act Regulations (7/26/23)
- NWC Celebrates the initial passage of the AML Whistleblower Improvement Act (12/26/22)
- WNN Reports on the historic passage of the AML Whistleblower Improvement Act (12/23/22)