Top whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto (KKC) is calling attention to a serious issue with the U.S.’s current whistleblower money laundering protections. In a recent article published in the National Law Review, Kohn explained the importance of rectifying an important issue with the Anti-Money Laundering Act of 2020. Congress originally structured the law to have similar whistleblower protections to the wildly successful Dodd-Frank Act, but then took those provisions out at the last moment.
On June 25, 2020, the Senate Banking Committee approved the National Defense Authorization Act, which contained an anti-money laundering bill that had significant parallels to the Dodd-Frank Act. It went through the Committee “without dissent.” It seemed that the Banking Committee understood that using the same whistleblower protections and mechanisms that have made the False Claims Act (FCA) and the Foreign Corrupt Practices Act (FCPA) so powerful over the last few decades would work the same magic when tackling international money laundering operations.
But when the bill was placed in front of the House-Senate Conference Committee, the whistleblower provisions of the Anti-Money Laundering Act were gutted, leaving whistleblowers without protection. Mandatory rewards were removed from the bill, leaving compensation for the dangerous task of blowing the whistleblower solely in the hands of the Secretary of the Treasury. Additionally, instead of allowing the rewards to be paid directly out of the amount recouped by the government in the event of a settlement or determination of liability, any theoretical rewards that were authorized would have to be paid out of a fund that Congress allocated each year, something that is unlikely to happen. Using Congressional appropriations to pay whistleblowers hasn’t worked well historically, as whistleblowers have to compete against the lobbying power of “thousands of well-financed special interests that successfully lobby every year for sums of money appropriated by Congress.”
In the article, Kohn lays out the argument for Dodd-Frank-style whistleblower awards and protections in the battle against money laundering. He explains that the Senate Banking Committee has the power to fix these issues by advancing amendments that would correct current problems. By calling attention to these problems, it is possible that the Senate Banking Committee will take the first steps towards fixing this grave mistake.