Anti-Money Laundering Revisions Provide Enhanced Protections and Awards for Whistleblowers

Anti-Money Laundering Revisions Provide Enhanced Protections and Awards for Whistleblowers

Modeled after a successful effort by the Securities and Exchange Commission, a new program will be implemented by U.S. officials to encourage more financial sector workers to come forward with information about money laundering risks.

Put into effect as part of the National Defense Authorization Act earlier this month, revisions to the Bank Secrecy Act will provide for anti-money laundering whistleblowers to collect up to 30 percent of monetary penalties collected. It will also offer enhanced protections for tipsters, including protection from retaliation, as well as enhanced penalties for violators.

The initiative, enacted over a veto by former President Trump, eliminated a previous cap on awards of $150,000. This is expected to help incentivize employees to report claims of wrongdoing, which they otherwise might have avoided bringing up for fear of blacklisting or other retribution.

According to world economic officials, more than $2 trillion in proceeds are generated globally through illegal activities such as tax evasion, smuggling, drug trade, and human trafficking. This illicit economic activity is made possible through the global financial industry, shell companies, and corporations, which might easily look the other way and let criminals launder funds.

Finally we have tools to plug up the economic pipeline for criminal enterprises. Whistleblowers will get the rewards they deserve for their bravery, and we will be able to combat this plague on our financial system.

The new AML whistleblower program will be handled through the Treasury Department’s Financial Crimes Enforcement Network, otherwise known as FinCEN. The agency focuses on curbing money laundering, terrorism financing, and other crimes.

Recent investigations have turned up a wide range of criminal activities financed in part through legitimate financial enterprises. Earlier this month, Capital One agreed to pay $290 million in penalties to FinCEN for willful anti-money laundering violations and doing business with a portfolio of check-cashing firms affiliated with the Genovese crime family. The Genovese family is one of the so-called “five families” of the American Mafiaa that dominate organized crime in New York City and New Jersey.

Another massive money-laundering scandal was a $229 billion scheme that involved Denmark’s largest lender Danske Bank. In 2007, the financial institution took over a branch in Estonia, which was sweeping in large deposits from illicit sources in Azerbaijan, Moldova, and Russia. A whistleblower initially raised alarm in 2013 about the funds, but it took years before management took action.

Other banks have been involved in backing the Mexican drug cartel business. In 2011, it was discovered that Wachovia, a bank now owned by Wells Fargo, laundered $378.4 billion from drug cartels.

Similarly, a consortium of journalists recently found that HSBC continued to provide banking services to Ponzi schemers, shell companies tied to drug traffickers, and a variety of other alleged criminal networks even while under federal probation for previous anti-money laundering lapses.

Policymakers hope that the anti-money laundering program will be able to stop these kinds of schemes long before they grow so large and enable so much harm. The SEC program is widely regarded as a huge success in helping to combat financial fraud. Whistleblowers have also benefitted substantially from the program. In October, for instance, the agency issued a record $114 million award for “extraordinary” assistance in major fraud case.

To find out how we can help you report fraud and collect your cash award, please contact our Orange County whistleblower litigation attorneys today:


David Kani

David Kani is a Southern California based trial lawyer with a focus on class actions and whistleblower (False Claims Act, SEC and others) cases.

To connect with David: [hidden email] or 714-907-0697.
To learn more about Hochfelsen & Kani LLP:

Read David's ebook: The Smart Whistleblower's Playbook
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