Expect an Explosion of Money Laundering Whistleblower Cases
On January 1st of 2021, Congress enacted the Anti-Money Laundering Act of 2020. This is the most comprehensive set of reforms to U.S. anti-money laundering (“AML”) laws since the passage of the USA PATRIOT Act in 2001. AMLA 2020 created a whistleblower program that emulates the SEC Whistleblower Program in many ways. While this was a groundbreaking piece of legislation, until recently, many anti-money laundering experts expressed skepticism about whether the whistleblower program had any teeth. That seems to have changed with the passage of the $1.65 trillion Omnibus Bill which sets up a revolving fund at the Treasury Department used to pay whistleblowers with money collected from enforcement actions based on their tips and provide the Financial Crimes Enforcement Network (FinCEN) with enough funding to carry out its expanded mission. With these and other changes, the whistleblower program more closely resembles the Securities and Exchange Commission’s very successful whistleblower program. When you think about the very finite population of individuals within a public company that may have visibility into securities fraud, there is an exponentially greater number of people who have visibility into money laundering and other types of suspicious activity within a financial institution or casino operator.
Does this mean can we expect to see a huge uptick in AML whistleblower cases? Quite possibly. More sets of eyes will very likely result in a very high volume of whistleblowers coming forward. Another important factor that could ultimately lead the AMLA 2020 Whistleblower Program to eclipse the SEC Whistleblower Program is the law of large numbers. Take for example the Danske Bank money laundering scandal. Had there been a whistleblower under the AMLA program, that individual would have been eligible to receive between $23 billion and $69 billion. In contrast, since its inception 11 years ago, the SEC Whistleblower Program has paid out a total of roughly $1.3 billion.
What does this mean to financial services companies and casino operators? They should find it scary and it should prompt them to ensure that their confidential reporting channels are working as designed. It is also a good time for institutions to ensure that they have qualified personnel evaluating alerts in a timely manner and investigating them when appropriate. Equally important for institutions is the need to ensure that their hotlines and other confidential reporting channels are readily accessible, communicated across the enterprise and their personnel feel encouraged to speak up without fear of retaliation.