Wednesday, April 14, 2021

U.S congress proposes anti-money-laundering whistleblower reward program

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A new whistleblower reward program incentivizing the reporting of potential violations of anti-money-laundering laws would be established as part of an annual defense-spending bill that is poised to clear Congress.

The program would offer awards to tipsters who voluntarily provide original information to the Treasury Department or the Justice Department on possible violations of the Bank Secrecy Act. Awards would be granted in cases where the tips lead to successful enforcement actions and the monetary sanctions exceed $1 million.

Congress is expected to vote as soon as this week on the National Defense Authorization Act for the 2021 fiscal year.

Under the proposed rules, a tipster or joint tipsters can receive up to 30% of the monetary penalties collected in an enforcement action brought by the Treasury or the attorney general and from related actions. The amount would be determined by factors such as the significance of the information and the degree of assistance from the tipster, according to the defense bill. The rules would also provide tipsters protection against retaliation from employers, including demotion, suspension and industry blacklisting.

The program, if enacted, would be an expansion of current incentives, observers said. Existing regulations permit the Treasury, at its discretion, to pay a reward of either $150,000 or 25% of the fine or penalty, whichever is less. Proponents of a new whistleblower program have said the existing incentives aren’t strong enough and haven’t attracted much attention.

A spokesman for the Treasury Department declined to comment.

The whistleblower program is part of the bill’s provision to improve efforts in communications and oversight in combating money laundering and terrorism financing. The bill also includes beneficial-ownership rules requiring companies in the U.S. to register their true owners.

The proposed cash-for-tips program would be a critical tool to identify and combat money laundering, said Jason Zuckerman, a lawyer at Zuckerman Law who represents whistleblowers. He said the proposed program rules are similar to those governing the Securities and Exchange Commission’s whistleblower program, which was created by the Dodd-Frank Act.

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he SEC whistleblower program has awarded at least $731 million to 123 individuals. Information provided by tipsters has helped the securities regulator recover more than $2.7 billion in total monetary sanctions from enforcement actions between 2011 and the end of September, according to the SEC Whistleblower Office’s annual report to Congress.

The proposed anti-money-laundering whistleblower program could close the enforcement gaps left by existing whistleblower programs at various agencies, including those of the SEC and Commodity Futures Trading Commission, which may have limited jurisdiction over potential money laundering violations.

“Often, people aware of money laundering might have learned about it in the course of interaction with organizations that are involved in financial crimes, and stepping forward to report it is a big deal,” Mr. Zuckerman said.

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