Whistleblower Experts Fear That Loopholes May Undermine New Anti-Money Laundering Whistleblower Law

On January 1, Congress passed the whistleblower provision of the Anti-Money Laundering Act. The Anti-Money Laundering (AML) Act is a section of the yearly National Defense Authorization Act (NDAA), which distributes funds to the U.S. Department of Defense (DOD) and became law when Congress overrode President Trump’s veto of the bill.

The purported goal of the AML Whistleblower Act is to incentivize individuals to blow the whistle on money laundering to the Department of Treasury. The Act is largely modeled off previous legislation which established successful whistleblower rewards programs, such as the Dodd- Frank Act (DFA) and the False Claims Act (FCA). The AML Whistleblower Act rules that whistleblowers who provide “original information to the employer of the individual, the Secretary, or the Attorney General, as applicable” that leads to a “successful enforcement of the covered judicial or administrative action” can receive a whistleblower award of up to 30% of the money recovered.

However, the AML Whistleblower Act contains provisions that significantly weaken the rights and remedies contained in the Dodd-Frank Act. Whistleblower attorney Stephen M. Kohn, who has represented high-profile AML whistleblowers like the former Danske Bank manager Howard Wilkinson, explained that the new law “is a step in the right direction, but will not work as currently approved” in an interview with WNN.

“The law breaks with standard practices and requires Congress to make annual appropriations to pay whistleblowers, a process that is doomed to fail. The $741 Billion in federal spending approved in the NDAA does not include any money to compensate whistleblowers,” Kohn added. In contrast to the AML, successful whistleblower rewards laws such as the DFA established funds to pay whistleblowers directly from the sanctions obtained from wrongdoers.

Additionally, Kohn stated that the AML Whistleblower Act “does not require the Secretary of Treasury to make a minimum award,” unlike the DFA and all the other successful reward laws. Instead, “the decision to grant awards is discretionary and the Secretary can effectively deny any whistleblower a meaningful award, for any reason whatsoever. An award as low as one penny cannot be appealed in court,” Kohn said.

On December 7, the National Whistleblower Center (NWC) sent a letter to Congress expressing their concerns with the lack of a provision requiring minimum awards. According to the 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.”

Despite the weaknesses of the AML Whistleblower Act, employees reporting money laundering violations may also be protected under other reward laws that guarantee minimum payments. These laws include the Internal Revenue Service (IRS) whistleblower law and the DFA. “Violations of money laundering laws often implicate other federal laws, such as foreign bribery, tax evasion, and the lack of proper corporate controls, which are covered under effective reward laws,” Kohn said.

Kohn urges whistleblowers who have knowledge about AML Whistleblower Act violations to “carefully review the various laws that may cover disclosures, and try to file their claims under laws that will work.” He thinks that “whistleblowers need to look toward the Dodd-Frank Act and the IRS whistleblower law for protection.”


An FAQ page on the AML Whistleblower Act.

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