Key Takeaways

• On Dec. 23, 2022, Congress passed the Anti-Money Laundering Whistleblower Improvement Act, expanding whistleblower protections and strengthening incentives for reporting.
• The legislation establishes a minimum financial reward for whistleblowers, creates a fund supported by violation recoveries and allows citizens of any country in the world to confidentially report violations and participate in recovery.
• The Act aims, in part, to enforce U.S. sanctions against Russia to locate and seize hidden or laundered assets.

As one of its last acts of 2022, Congress aimed to close loopholes in the Anti-Money Laundering Act of 2020 (AMLA) that left it unclear how and how much whistleblowers would be paid. On Dec. 23, 2022, Congress passed the Anti-Money Laundering Whistleblower Improvement Act (AML Whistleblower Act) clarifying these open issues in an effort to encourage whistleblower cooperation.

The AMLA provided protection from retaliatory actions and confidentiality for whistleblowers as well as rewards of up to 30 percent of the amount exceeding $1 million recovered by the U.S. Treasury. The AML Whistleblower Act expands whistleblower protections and strengthens incentives for reporting. Whistleblowers who report sanctions violations or instances of money laundering will qualify for mandatory financial rewards. Similar to the Dodd-Frank whistleblower provisions applicable to Foreign Corrupt Practices Act violations, citizens of any country in the world can now report sanctions violations anonymously and confidentially and qualify for financial rewards.[1] The AML Whistleblower Act establishes a statutory minimum award of at least 10 percent of any sanction, fine or penalty collected based on the whistleblower’s tip, eliminating the discretionary nature of the award promised in the AMLA. The AML Whistleblower Act also designates a $300 million Financial Integrity Fund financed through sanctions the Department of Justice and U.S. Treasury Department collect from AML violators, instead of depending on Congressional appropriations.

The legislation, which was motivated in part by the desire to enforce the restrictions the U.S. placed on Russia following its invasion of Ukraine, is intended to embolden whistleblowers to come forward in the near future. Legislators believe the AML Whistleblower Act will have a direct impact on the ability of U.S. law enforcement agencies to track down assets held by Russian oligarchs and sanctioned entities and specifically encourage whistleblowers inside Russia and Russia’s trading partners to help U.S. authorities seize sanctioned Russian wealth safely and effectively. The new law explicitly covers whistleblowers who report bank accounts, hidden assets, or property held by sanctioned Russian entities or oligarchs anywhere in the world. The AML Whistleblower Act also permits whistleblowers to report banks and financial institutions that assisted sanctioned entities or persons in laundering money or using their assets to evade sanctions.

Under Dodd-Frank, whistleblowers have already obtained over $1.3 billion in awards, including $229 million in 2022 alone. As sanctions enforcement and whistleblower awards are likely to increase in the near future, whistleblowers should retain independent counsel to help understand their protections and ensure collection of due compensation.

By: George A. Stamboulidis and Christina O. Gotsis