The Anti-Money Laundering Whistleblower Improvement Act, expected to have an influential role in global anti-corruption initiatives, should start to effectively deliver on its promises in 2024 according to Bloomberg Law. Established by the AML Act of 2020, the AML Whistleblower Program was initially encumbered by loopholes, such as the lack of required whistleblower awards. This led many potential whistleblowers to avoid using the program.
However, with the passing of the AML Whistleblower Improvement Act on Dec. 29, 2022, these deficiencies were addressed directly. Whistleblowers are now eligible for financial awards of 10% to 30% of the funds recouped in an enforcement action tied to their disclosure. Notably, the reforms also allowed the AML Whistleblower Program to consider sanctions violations, further broadening its scope.
Crafted in response to Russia’s invasion of Ukraine and the subsequent need to track illicit financial activities of Russian oligarchs, the Improvement Act allows individuals from any part of the globe to report…money laundering and other violations of the Bank Secrecy Act as well as sanctions infractions. The scope of the AML Whistleblower Program is global, covering not only traditional banks, but also cryptocurrency exchanges.
Importantly, The United States Strategy on Countering Corruption has explicitly endorsed comprehensive utilization of the AML Whistleblower Program to combat international corruption. Another legislative measure, the Dodd-Frank Act, has also facilitated global anti-corruption efforts by providing incentives for whistleblowers to report underlying illegalities.
Indeed, these regulations have already been put to the test with the SEC issuing a record-breaking $279 million whistleblower award in May 2023. These instances have prompted advancing global anti-corruption enforcement, as evidenced by the sanction against Vitol Inc. of $95.7 million for fraud and violation of market norms.
As we look into the future, the AML Whistleblower Program has the potential to assume a lead role in worldwide anti-corruption initiatives. However, the successful implementation of the program requires efficacious utilization by the Treasury Department and FinCEN, and the regulations should effectively meet the unique needs of international anti-corruption whistleblowers.
In the drafting of regulations specific to their programs, the SEC and CFTC lacked awareness as to the expansive scope of the initiatives’ potential international scope. This resulted in unintentional exclusions of international whistleblowers. Lessons from these oversights could be instrumental for the Treasury and FinCEN in formulating regulations for the AML Whistleblower Program given the program’s international reach.
Again, the articulation of these regulations has been critical to global anti-corruption efforts and can live up to the expectation of being the US’s most effective transnational anti-corruption law in future years, provided the Treasury and FinCEN incorporates the concise needs of international whistleblowers as guided by the White House’s strategic outline for combating corruption, in their implementation of the AML Whistleblower Program.