The AML Whistleblower Law: Don’t Put Lipstick On a Pig

AML Whistleblower Law

When it comes to whistleblower rights, we at WNN are tired of reading self-serving articles that all too often put lipstick on a pig. If a law passed by Congress is bad, say so. Don’t cover it up.

Such is the case of the new anti-money laundering (“AML”) whistleblower law that became effective on January 1, 2021. We are very concerned that loopholes and deficiencies in this whistleblower law will result in hardships and terrible outcomes. Often AML violations implicate organized crime, bribery, drug cartels, and terrorist financing. Often the money is laundered from countries with poor records on human rights. Whistleblowers who report these types of violations can face life-threatening retaliation. Thus, AML whistleblowers need the strongest possible protections.

To put it bluntly, this law is terrible. It sets a bad precedent for the enactment of more weak and ineffective laws. The original Senate version of the bill closely mirrored the Dodd-Frank Act, and WNN fully supported the Senate version. However, in the House-Senate Conference, where the final version of the law was hammered out, key provisions that were in the Senate version were cut. The Congressional process used to pass the massive National Defense Authorization Act (NDAA) worked against us, as the money laundering law was simply one part of this massive last-minute defense appropriations act approved in the final moments of 2020.

All of the major banks strongly supported the AML law. The American Banker said it clearly: “Banks can Smell Victory on Key Anti-Laundering Measure.” The AML reform law was strongly endorsed by the U.S. Chamber of Commerce (which has aggressively fought every whistleblower law for over 25 years) and the Bank Policy Institute. The BPI is the leading trade association of the largest banks in the world, many of whom are the worst money laundering institutions. Its executive board is a who’s who of Big Banks, including the Chief Executive Officers of Bank of America, BYN Mellon, Citigroup, Wells Fargo, JP Morgan Chase, Comerica Bank, and Barclays.

Given the seriousness of this matter, WNN contributing editor, whistleblower attorney Stephen M. Kohn wrote a comprehensive article identifying the seven major problems with the AML whistleblower law. It should be read by all opponents of corruption and money laundering. It forms the basis to present a full analysis of the numerous problems that will render the new AML law ineffective and mislead whistleblowers into thinking they have rights when they do not. That article is linked here: Congress Must Fix The Anti-Money Laundering Whistleblower Law.

As explained in the article, there are seven major problems in the law. These include non-existent anti-retaliation protections for employees at all FDIC insured institutions and no money is set aside to pay the rewards the law authorizes. Thus, currently, no AML whistleblower can actually obtain the “rewards” promised in the law.

Loopholes in the reward law will mislead whistleblowers. Although the law permits reward payments as high a 30% of the sanctions, the law also permits the U.S. government to pay rewards as low as $1.00, with no right to appeal.  Even if you could qualify for the One Dollar award, whistleblowers would have to ask Congress to explicitly appropriate those funds. Without such appropriations, it would violate federal law for the Treasury Department to make any payments. There is no Whistleblower Office, no requirement that rules be established, and attorney fees are double taxed, resulting in massive hardship to whistleblowers if they were ever to get any money at all.

Until the law is amended, AML whistleblowers should consider using highly effective whistleblower laws that do not share these defects, such as the Dodd-Frank Act.

Every whistleblower advocate and every person dedicated to anti-corruption and using enforcement tools to stop some of the world’s worst crimes must join together to insist Congress fix this law. This is a matter of urgency.

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