On April 28, the U.S. House of Representatives Committee on Financial Services is holding a hearing “Oversight of the Financial Crimes Enforcement Network.” Among the legislation to be discussed at the hearing is H.R. 7195, which offers much-needed reforms to the recently established Anti-Money Laundering (AML) Whistleblower Program.
The AML Whistleblower Program was established in January 2021 with the passage of the Anti-Money Laundering Act of 2020 (AML Act). Since then, whistleblower advocates have repeatedly called for reforms to the program, claiming that legislative loopholes would undermine the much-needed whistleblower award program.
H.R. 7195, which was introduced by Representative Alma Adams (D-NC) in March, offers two reforms to the AML Act which whistleblower advocates have requested for some time. The bill guarantees a minimum award amount for qualified whistleblowers and establishes a fund to finance the whistleblower award program.
Adams’ bill is supported by the National Whistleblower Center (NWC). “Current events have illustrated the importance of controlling illegal banking activities like money laundering and bribery to safeguard democracy against the kind of instability and violence that we see occurring in Ukraine,” said NWC Executive Director Siri Nelson. “Anti-money laundering whistleblowers are critical to the success of U.S. sanctions and Rep. Adams’ introduction of this bill could not have come at a better time!”
The AML Act’s current lack of a mandatory minimum means that awards are purely discretionary and the Treasury Department can withhold an award from a fully qualified whistleblower. Prior to the passage of the AML Act, NWC sent a letter to Congress expressing their concerns about the lack of a provision requiring minimum awards. According to NWC, the lack of a mandatory minimum award “greatly undercuts Congress’s intent to strengthen protection of whistleblowers with evidence of money laundering and terrorist financing.”
The other loophole Adams’ bill addresses is the current lack of funding for the AML Whistleblower Program. Unlike the Dodd-Frank Act, which established a fund to pay whistleblower awards entirely financed through sanctions collected in enforcement actions brought by whistleblowers, the AML Act relies on Congressional appropriation to receive funding to pay awards. Whistleblower experts claim that programs cannot be reliant on appropriates if they are to succeed.
In the U.S. Senate, Senators Chuck Grassley (R-IA) and Raphael Warnock (D-GA) are cosponsoring a companion bill which fixes the same loopholes in the AML Act. This bill is also supported by whistleblower advocates.