Anti-Money Laundering Compliance Game Changer: A series on the Anti-Money Laundering Act of 2020.

Feb 04, 2021   

Anti-Money Laundering Compliance Game Changer: A series on the Anti-Money Laundering Act of 2020.

Part I: New BSA/AML Whistleblower Program

On January 1, 2021, Congress overrode President Trump’s veto and passed the Anti-Money Laundering Act of 2020 (“AMLA”). The AMLA, included as Division F of the omnibus National Defense Authorization Act for fiscal year 2021, is widely considered the most comprehensive set of reforms to the Bank Secrecy Act since the USA PATRIOT Act of 2001. The reforms cover a wide variety of areas including the creation of an enhanced whistleblower program, beneficial ownership disclosure requirements, clarification and expansion of the Bank Secrecy Act’s definition of “financial institutions,” expansion of the U.S. government’s authority to seek information from foreign financial institutions and share information with foreign regulators, streamlining and modernizing the Suspicious Activity Report (SAR) and Currency Transaction Report (CTR) reporting processes, and increased penalties for BSA violations. In this article, we focus on AMLA’s complete revamping of the BSA whistleblower program.

The AMLA vastly reshapes the BSA whistleblower program by increasing the rewards associated with whistleblowing. The revised BSA whistleblower reward structure is modeled after the Securities and Exchange Commission Whistleblower Program passed as part of the Dodd-Frank Act of 2010.

Under the prior version of the BSA whistleblower program, rewards for tips leading to successful enforcement actions was discretionary and capped at $150,000. However, under the new AMLA program, in cases where a whistleblower discloses an AML/BSA violation to the government, and the government then brings an enforcement actions that result in its recovery of $1 million or more, the Treasury Department is required pay an award to the whistleblower up to 30 percent of the amount recovered.

In order to be eligible for an award the following requirements must be met. First, the whistleblower must voluntarily report the BSA violation to either their employer, the Treasury Department, or the Department of Justice. Second, the information provided must be “original information.” As defined by the AMLA, “original information” means information that: i) is derived from the independent knowledge or analysis of a whistleblower; ii) is not known to the Treasury Department or DOJ from any other source, unless the whistleblower is the original source of the information; and iii) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a government report, hearing, audit, or investigation, or from the news media, unless the whistleblower is the source of the information. Additionally, the information provided must lead to a successful enforcement action, and the government must recover an amount greater than $1 million.

It is important to note that whistleblowers who acquire “original information” while “acting in the normal course of the job duties of the whistleblower” are ineligible for an award. Thus, from a practical standpoint, BSA/AML compliance personnel will face increased difficulties and/or limited opportunities serving as whistleblowers entitled to participate in the government’s recovery.

In addition to increasing rewards for whistleblowers, the AMLA establishes protections for whistleblowers against retaliatory measures taken by a whistleblower’s employer. The new law provides that if a whistleblower’s employer takes a retaliatory enforcement action against the whistleblower’s, the whistleblower will have the right to file a complaint with the Department of Labor, and should the matter not be fully resolved before the Department within 180 days, directly file a complaint against the employer in federal district court. Penalties associated with a finding of retaliation include: i) reinstatement; ii) 2 times back pay plus interest; iii) compensatory damages; and iv) attorneys’ fees and costs. The AMLA provides provides further protections than the SEC whistleblower program because it protects from retaliation in-house reporting to supervisors.

With increased rewards and heightened protections, it is widely expected that the revamped BSA whistleblower program will result in a significant increase in reporting of BSA violations. In the meantime, financial institutions should begin to prepare for this new era in regulatory compliance by reevaluating and strengthening their AML compliance programs, implementing internal reporting systems for BSA deficiencies, and establishing anti-retaliation policies to ensure protection for those who make reports.

Fuerst Ittleman David & Joseph has years of experience in cases involving whistelblowers – including by having represented whistleblowers and the companies against which other whisteblowers have charged with misconduct. We also specialize in anti-money laundering law, and represent a wide array of financial institutions in matters involving anti-money laundering compliance. For more information about the Bank Secrecy Act, anti-money laundering compliance, or the new AML whistleblower laws described in this article, contact us by email at info@fidjlaw.com or by phone at 305-350-5690.