Transnational Crime and the Laws that Apply

A myriad of U.S. laws allow for whistleblowers around the globe to come forward with evidence of transnational crimes like illegal trafficking and money laundering.

Transnational crimes that are those that by nature involve cross-border transference – in other words, they occur in more than one country. This encompasses a range of activities including human smuggling, wildlife trafficking, money trafficking, and other crimes expansive in scope and international in scale.

Traffickers, black market dealers, and others involved in this sort of criminal activity maintain massive networks of trade that are propped up by fraudulent dealings, illegal imports and exports of stolen goods, as well as through the subversion of the rule of law. The U.S. Office of the Director of National Intelligence (DNI) estimates that the global annual dollar value of crimes such as money laundering ranges from $1.3 to $3.3 trillion.

Due their underground nature, these types of crimes are almost impossible to detect through law enforcement alone, making them difficult to combat and even more difficult to prosecute. That is why whistleblowers with original information and evidence of violations of transnational law are one of the best anti-fraud countermeasures that exist. Individuals with insider information can rely on powerful U.S. laws to confidentially report fraud, corruption, waste and abuse and get rewarded, regardless of their country of citizenship.

Application of Transnational Laws

Over the past several decades, U.S. whistleblower programs have rewarded non-U.S. citizens millions of dollars for reporting overseas violations of the Foreign Corrupt Practices Act (FCPA) and other major anti-corruption laws, including securities and commodities violations, money laundering, bank secrecy, and tax evasion.

A powerful anti-corruption law, the FCPA contains two major provisions that prohibit bribery and mandate clean accounting practices for issuers of securities. The anti-bribery provision prohibits any individual or business from using “anything of value” to bribe a foreign official in order to retain or obtain business, this could be money, fortuitous arrangements, vehicles, clothing, etc. Prohibited bribery under the FCPA may include paying off foreign officials to win a bid for a contract, to bypass certain regulations, or to illegally continue a contract.

In terms of accounting provisions, the FCPA requires issuers of stock on stock exchanges in the United States or that file reports with the U.S. Securities and Exchange Commission (SEC) to keep and create accurate records of corporate and business transactions. These issuers are also prohibited from falsifying any of this information. Accounting violations under the FCPA may include improper internal record-keeping, inaccurate information on books and records, and insufficient anti-bribery compliance policies.

In 2014, the SEC awarded a whistleblower $30 to $35 million for providing original information that resulted in a successful FCPA prosecution. In their decision, they ruled that “[I]t makes no difference whether…the claimant was a foreign national, the claimant resides overseas, the information was submitted from overseas, or the misconduct comprising the U.S. securities law violation occurred entirely overseas.”

Whistleblowers have also been able to help fight other types of transnational fraud like securities and commodities fraud by confidentially reporting to agencies like the SEC and Commodity Futures Trading Commission (CFTC), whose whistleblower programs were both established by the Dodd-Frank Act. Since the implementation of the Dodd-Frank Act, over $40 million has been paid to overseas whistleblowers. In FY 2019, the SEC received international whistleblower tips from individuals in 70 foreign countries. Publicly-traded companies in the U.S. are subject to oversight by Dodd-Frank and any securities, commodities, or even foreign bribery whistleblowers are covered under this Act. Foreign corporations doing business in the United States that lie on SEC filings or engage in insider trading would be in violation of Dodd-Frank.

The federal False Claims Act can also be used by whistleblowers reporting international and transnational crimes. With its successful qui tam whistleblower provision, the False Claims Act has recovered billions for taxpayers since its revision in 1986. The False Claims Act aims to protect the government from incidents of fraud. False statements about the value of imported goods entering the United States – an instance where a wrongdoer has prevented the government from collecting what is owed – would be in violation of the FCA’s reverse false claims provision. Under the FCA, a whistleblower can receive between 15% to 30% of sanctions obtained from successful enforcement actions. Under its qui tam and reverse false claims provisions, the FCA is a crucial tool in a whistleblower’s arsenal, as they report and help prosecute international fraud.

The Critical Importance of Whistleblowers

Transnational crime in all of its forms is an enormous burden upon global economies, public health, infrastructure, and global biodiversity. However pervasive international incidents of fraud and corruption are, many times they go unseen by law enforcement officials unequipped to detect the sheer scope of transnational crime and enforce those crucial anti-corruption laws.

More modern whistleblower reward laws require whistleblowers to provide information directly to these officials tasked with prosecuting corruption. Law enforcement officials can then evaluate the specific contributions that whistleblowers make in enabling the prosecution of crimes that are difficult to detect and prove, like international terrorist financing, money laundering, or tax evasion. Oftentimes with the best access to original information regarding transnational crime, whistleblowers are an invaluable tool in detecting illegal activities away from the eyes of regulatory and enforcement bodies in the U.S. and elsewhere.

Many U.S. agencies including the SEC and DOJ can attest to the power of whistleblowers in combatting fraud across the world. After the False Claims Act was updated in 1986, whistleblower cases allowed for the recovery of $44.7 billion in fraud sanctions, with only $17.3 billion recovered without help from whistleblowers. In contracting and procurement fraud cases, whistleblowers were responsible for 72% of recovered funds under the False Claims Act in 2019. And since the implementation of the Dodd-Frank Act, over $40 million has been paid to overseas whistleblowers. Protecting the rights of whistleblowers and working to strengthen them is critical for the success of these anti-corruption provisions and programs, as well as for the safety of global economies, ecosystems, and health.

Many times, whistleblowers who have come forward to expose waste, fraud, and abuse on an international scale have done so by relying on the U.S.’ comprehensive whistleblower laws – and succeeded. Blowing the whistle on illegal offshore accounts held in Switzerland by U.S. citizens through UBS bank, Bradley Birkenfeld, the first international banker to do so, obtained the largest ever whistleblower award in 2012 through the IRS’ whistleblower program, receiving $104 million. Another whistleblower, Howard Wilkinson, raised concerns of a Danske Bank money laundering scheme in 2013. His disclosures kicked off numerous European investigations into what could be one of the largest money laundering schemes in history. These stories show that a single whistleblower relying on the right U.S. agencies and laws can make a tremendous impact on global systems, protecting taxpayers and prosecuting widespread corruption.

NWC Campaigns Combatting Transnational Crime

In order to empower whistleblowers to come forward with evidence of transnational crime and bring wrongdoers to justice, NWC works to educate whistleblowers, U.S. citizens and non-U.S. citizens alike, about their rights and protections under U.S. law. Some of our work to support whistleblowers reporting transnational crime includes:

Reporting Wildlife Crime

NWC’s Global Wildlife Whistleblower Program works to strengthen wildlife whistleblower protections by educating potential whistleblowers around the world about their protections under U.S. law in order to encourage and incentivize the high-quality confidential reports essential to detecting wildlife crimes and enforcing the laws prohibiting illegal trafficking worldwide.

Some of the U.S. federal laws that whistleblowers reporting wildlife crime and wildlife trafficking can use include the False Claims Act, the Foreign Corrupt Practices Act, the Lacey Act, and the Endangered Species Act. Many of these laws target operations within organized crime and trafficking, seeking to dismantle the wildlife trafficking supply-chain and protect wild species.

NWC has supported various legislative initiatives to empower law enforcement to better track down and bring wildlife traffickers to justice. In order to guarantee that all whistleblowers can come forward and report fraud without fear, NWC continues to advocate for advanced protections for whistleblowers around the world reporting wildlife crime. To learn more about this campaign, click here.

Protecting Forests from Industrial Logging

As part of NWC’s Climate Corruption Campaign, NWC educates and assists whistleblowers in the industrial logging sector with knowledge of illegal timber operations globally. Illegal logging disrupts global markets and the global economy, costing regional governments billions in lost tax revenue. An INTERPOL report estimated that illegally sourced timber was worth between $51 and $152 billion USD, annually. This estimate does not factor in the reduction in legal timber prices, estimated to be between 7% and 16% from this illicit trade. Exacerbating the issue, illegal timber operations are pervasive and hard to target. NWC educates illegal logging whistleblowers about how to come forward, stay protected, and receive rewards. It also assists whistleblowers in filing allegations and obtaining legal aid. To learn more about this campaign, click here.

Safeguarding Oceans from Shipping Pollution

The very nature of illegal oil and waste pollution in our world’s oceans comes at a transnational cost. Maritime vessels that shirk environmental regulations tend to do so in international waters away from any oversight – other than the crew. NWC assists whistleblowers aboard these vessels in coming forward with evidence of pollutive activities under the Act to Prevent Pollution on Ships or APPS.

APPS authorizes the international treaty developed by the International Maritime Organization, MARPOL, making it a crime for anyone to knowingly violate MARPOL, APPS, or any regulations promulgated under APPS. Additionally, APPS applies to all U.S.-flagged vessels and to all vessels, including foreign-flagged vessels, at the port under U.S. jurisdiction or operating in the navigable waters of the United States. Therefore, crewmen on U.S. and non-U.S. ships who witness violations of APPS and illegal pollution can rely on APPS to make a disclosure and get rewarded. To learn more about this campaign, click here.

Conserving Ocean Fisheries Threatened by Illegal Fishing

Illegal, unreported, and unregulated fishing, or IUU fishing, jeopardizes global economies and ecosystems, propped up by corrupt companies and other fraudulent actors worldwide. According to the United Nations Food and Agriculture Organization, illegal fishing costs the global economy up to $23 billion USD annually.

IUU fishing puts pressure on fish populations, dwindling their numbers while fish-dependent communities suffer economically. To aid in this fight to preserve global fisheries and guarantee food security, NWC’s IUU fishing campaign advocates for the creation and implementation of wildlife laws to combat illegal worldwide fishing. Whistleblowers with evidence of IUU fishing can rely on federal U.S. laws like the Lacey Act, False Claims Act or Fish and Wildlife Improvement Act to confidentially make disclosures and, at times, get rewarded. Whistleblower reports are critical to ending these fishing-related crimes and allowing marine ecosystems to heal. To learn more about this campaign, click here.

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