Whistleblower protection has been recognized as part of international law since 2003, when the United Nations adopted the Convention Against Corruption. This convention was subsequently signed by 140 nations and formally ratified, accepted, approved, or acceded by 137 nations, including the United States. Article 32 and Article 33 of the UN Convention endorse protection for whistleblowers.
However, the strength of whistleblower laws vary substantially from country to country. Many countries have no laws at all, while others offer only weak protections. The current leader in strong whistleblower protection laws is the United States, which has enacted dozens of federal laws aimed at protecting whistleblowers and incentivizing them to come forward.
Given the broad strong transnational scope of these laws, they are now applicable to most of the worldwide public traded economy. Critically, many of the strongest U.S. federal whistleblower laws allow for non-U.S. citizens to report fraud confidentially.
As such, non-U.S. citizens are also often eligible to receive rewards from the U.S. government if the original information provided leads to a successful prosecution. These rewards are a percentage of the amount the government recovers from the case. Reward programs have proven essential to the success of whistleblower programs. In certain cases, whistleblowers are even able to seek political asylum – learn more here.
In recent years, thousands of whistleblowers around the world from over 120 countries have actively used U.S. laws to report instances of fraud, waste, and abuse. And as NWC board chair Stephen Kohn notes:
“The fact that thousands of international residents are actively participating in the U.S. whistleblower programs debunks any argument that whistleblowers are somehow unique to American culture, and laws that incentivize their disclosures should not be implemented worldwide.”
Thanks to these laws, whistleblowers now play an essential role in detecting economic crimes worldwide – including bank secrecy, illegal foreign accounts, money laundering, ocean pollution, bribery, securities violations, and more.
Some of the whistleblower laws that reward non-U.S. citizens include the Foreign Corrupt Practices Act, Dodd-Frank Act, False Claims Act, and Internal Revenue Act. They have all proven highly successful. Under one law alone, the False Claims Act, the U.S. government has recovered over $46.5 billion in sanctions and awarded $7.8 billion to whistleblowers since 1986.
Below is a brief primer on each of these key laws and some of the types of fraud they encompass.
The Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act (FCPA) prohibits thousands of corporations, both U.S. and international, from paying bribes to foreign officials and mandates proper financial record keeping.
In a major breakthrough for international whistleblowers, on July 21, 2010 President Obama signed legislation that permits whistleblowers, including foreign nationals, to apply for monetary rewards based on reporting bribery. The Dodd-Frank Wall Street Reform and Consumer Protection Act mandates that the U.S. Securities Exchange Commission (SEC) pay whistleblowers monetary rewards if they provide the U.S. government with information that leads to the successful enforcement of the FCPA. The act is applicable even if bribes are paid in a foreign country and the whistleblower is a foreign national.
Those qualified to receive a monetary reward under the FCPA include whistleblowers that voluntarily submit original information that leads to the successful enforcement of the violation and collection of monetary sanctions. Under the Dodd-Frank Act whistleblowers can submit claims anonymously. The U.S. government has successfully prosecuted many foreign nationals and foreign corporations under the FCPA.
The National Whistleblower Center has released a report analyzing data from Foreign Corrupt Practice Act (“FCPA”) cases since the law was passed in 1977, including several cases decided in 2018. Read the report here, or in PDF format here.
The Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act is a major Wall Street reform law enacted after the 2008 financial crisis. The Act covers commodities and securities actions worldwide and aims to promote financial stability by improving accountability and transparency. It created two qui tam whistleblower programs in the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), as well as enhanced whistleblower provisions under the Foreign Corrupt Practices Act.
Securities, commodities, and foreign bribery whistleblowers are now covered under enhanced provisions aimed at protecting their confidentiality and permitted to anonymously file reward complains. Whistleblowers outside of the United States are also now entitled to a financial reward.
Since this law was enacted, the SEC and CFTC have awarded hundreds of millions (US$) to whistleblowers who exposed fraud in securities and commodities trading and helped produced monetary sanctions in the hundreds of millions (US$) for the benefit of shareholders and economic fairness.
The SEC’s Office of the Whistleblower notes that “allowing foreign nationals to receive awards under the program best effectuates the clear Congressional purpose underlying the award program.” In FY 2019, the SEC received international whistleblower tips from individuals in 70 foreign countries.
The False Claims Act
Whistleblowers with knowledge of attempts by groups or individuals to knowingly defraud the U.S. government can look to the federal False Claims Act to confidentially report fraud and get rewarded.
The False Claims Act has a broad scope, applying to cases around the world in which U.S. federal spending, procurement or contracting involved. It contains an extremely successful whistleblower provision that allows whistleblowers to bring lawsuits forward on behalf of the U.S. government, known as a qui tam action.
Under this provision, whistleblowers can be rewarded for confidentially disclosing fraud that results in a financial loss to the federal government. Provided that their original information results in a successful prosecution, whistleblowers are awarded a mandatory reward of between 15% to 30% of the collected proceeds. These rewards are often substantial, since under the False Claims Act, the criminal is liable for a civil penalty as well as treble damages. Both international whistleblowers and NGOS are qualified for these rewards.
Since the False Claims Act was signed into law, it has become the most successful anti-fraud act in the United States. According to the Department of Justice, in Fiscal Year 2019 alone, the government recovered over $3.7 billion in FCA settlements and judgements. $2.1 billion of that can be attributed to whistleblower-initiated cases.
The Internal Revenue Act
The Internal Revenue Act provides rewards to whistleblower who report violations of internal revenue laws and underpayments of taxes to the Internal Revenue Service (IRS). Its scope includes international money laundering.
Following 2006 revisions, rewards are now mandatory for whistleblowers in large tax cases. The IRS is required to give eligible whistleblowers 15% to 30% of the amount recovered from successful prosecutions.
Since 2007, the Whistleblower Office has collected over $5.7 billion and made awards in the amount of $931.7 million. The program continues to grow in international importance as well with 282 whistleblowers from outside the U.S. in FY 2019.
Environmental Protection Laws and their Transnational Application
Many environmental and wildlife protection laws also authorize rewards to non-U.S. citizens for original information that leads to a successful prosecution or enforcement action of individuals or parties violating wildlife and environmental protection statutes.
The Endangered Species Act (ESA), enacted in 1973 to protect endangered and threatened species and provide for their conservation, additionally provides rewards to whistleblowers who disclose violations of the ESA. The act permits the Secretary of Agriculture, Commerce, Interior, and Treasury to authorize such rewards and the amount of the award, as appropriate. The ESA states that the Secretary in question shall pay sums received as penalties, fines or forfeitures of property in violation of the act to “any person who furnishes information that leads to an arrest, a criminal conviction, civil penalty assessment, or forfeiture of property in violation of this Act.” Any whistleblower with original information of violations of the ESA within a U.S. nexus can get rewarded.
The Lacey Act is a federal conservation law that prohibits the importation, exportation, sale, acquisition or purchase of fish, wildlife, or plants that are taken, possessed, transported or sold in violation of U.S. law, Indian law, or in interstate or foreign commerce in violation of state or foreign law. Similar to the Endangered Species Act, the Lacey Act permits the Secretary of the Department of Agriculture, Commerce, Interior, and Treasury to reward whistleblowers who furnish information as to the aforementioned illegal trade of plants and wildlife.
Finally, the Act to Prevent Pollution from Ships or APPS permits federal courts to reward whistleblowers who disclose the illegal dumping and pollution on ships and maritime vessels. APPS’ jurisdiction covers all U.S. vessels and foreign-flagged vessels at U.S. or U.S. governed ports as well as vessels operating in the navigable waters of the United States. The largest APPS award was $5.25 million to a group of whistleblowers from the Philippines in USA v. Overseas Shipholding Group, Inc.