Recently, Congress strengthened the enforcement of its anti-money laundering (AML) laws by deputizing citizens and encouraging them to become whistleblowers by creating an even more generous whistleblower rewards program. While this program is similar to the whistleblower programs run by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and other federal agencies, the eligibility requirements to participate in the AML program are less restrictive and the fines that can be collected may be significantly higher.

In this article, Dr. Nick Oberheiden, the founding partner of the national law firm Oberheiden P.C. and a leading AML whistleblower lawyer at the firm, explains the basics of the AML whistleblower program and why it is so important to have an experienced attorney representing you, and then answers three frequently asked questions that clients tend to have about the program and process.

The Basics of the AML Whistleblower Reward Program

In 2020, Congress passed the Anti-Money Laundering Act (AMLA). Included in the provisions of the Anti-Money Laundering Act are several sections that require the U.S. Department of the Treasury to pay financial awards to whistleblowers who voluntarily provide original information that leads to successful AML enforcement actions. 

Three important things to understand about the program are:

1. Who is eligible for it
2. What they must provide
3. How much the award can be

Some of these areas have changed recently with the newly-passed Anti-Money Laundering Whistleblower Improvement Act (AMLWIA), which was signed into law by President Biden in December, 2023, as a part of the Consolidated Appropriations Act.

Eligibility

Typically, to be eligible for the AML whistleblower program, you would need to have evidence of a violation of the Bank Secrecy Act (BSA) or one of the many regulations that have sprouted from it. However, the new AMLWIA expanded the eligibility requirements to participate in the program by broadening the scope of conduct that it covered to include sanctions violations. This includes violations of the:

• International Emergency Economic Powers Act
• Trading With the Enemy Act 
• Foreign Narcotics Kingpin Designation Act

Before the AMLWIA passed in 2023, there had been no applicable federal laws for people who wanted to blow the whistle on these sanctions violations. Now, the vehicle for these cases is U.S. anti-money laundering law. The impetus for this change was the war in Ukraine, with Congress looking for all the help it could find in order to keep Russia from evading the heavy sanctions that the U.S. government had imposed on it for invading Ukraine.

The alleged violator does not need to be a U.S. company, either. Foreign companies that violate U.S. sanctions or launder money are also subject to enforcement actions.

The AML Whistleblower Program is fairly unique, though, in that it is open to whistleblowers who have obtained their information through their role as an auditor or as a compliance manager or professional. The AMLA is actually quite explicit about this.

Finally, AML whistleblowers do not have to be U.S. citizens to benefit from the rewards program – a surprising but necessary provision, given how much misconduct happens abroad.

Information You Must Provide to Be a Whistleblower

To be a whistleblower in the AML Whistleblower Program, you would have to provide original information about a violation, any violation at all, of the BSA or its supporting regulations, or of U.S. economic sanctions. 

Such information can take a nearly infinite variety of forms, though it generally is either direct evidence of money laundering or a violation of sanctions law, or is information about a company’s failure to comply with these laws. By reporting such corporate noncompliance, it can spawn an investigation that regulators use to discover actual violations of the law.

These violations can be current and ongoing, about to occur, or even ones that occurred in the past. So long as the violation happened within the applicable statute of limitations, you can blow the whistle on it. The applicable statute of limitations can vary, though. For example, violations of the Bank Secrecy Act have a 5-year statute of limitations for criminal penalties and a 6-year period for civil actions. 

To be a whistleblower, you would have to report the information to any of the following:

• The Department of Justice (DOJ)
• The Department of the Treasury
• Your employer

Typically, whistleblowers who are represented by a whistleblower lawyer will submit their tip to the Financial Crimes Enforcement Network (FinCEN) at the Treasury Department.

Amount of the Award

Whistleblowers are entitled to recover up to 30 percent of the monetary sanctions that are recovered in a related enforcement action. Those “monetary sanctions” include the money that is recovered by the enforcement agency, as well as any of the following amounts that are ordered to be paid:

• Penalties
• Interest
• Disgorgement

However, the following amounts are not included in the “monetary sanctions”:

• Victim compensation and restitution
• Asset forfeiture

Importantly, the new AMLWIA established a minimum amount that whistleblowers stand to receive: 10 percent of the sanctions that are recovered in the resulting enforcement action. Before this 2023 law was passed, there was no statutory minimum, and circumstances could lead to whistleblowers recovering very little for their efforts and the significant risks that they have taken. The AMLWIA also created a fund to pay these awards out, so money has already been set aside for rewarding whistleblowers. Even better, this account is funded by AML sanctions that have already been collected – similar to the SEC whistleblower program – so whistleblowers are not at the mercy of Congress’ decision to appropriate funds or to withhold them. 

Why an Anti-Money Laundering Whistleblower Lawyer is So Important

Hiring a lawyer who is experienced in whistleblower cases is probably the most important thing that you can do, and for a single reason: They will have done this before. 

Whistleblowing is rarely something that a member of the public will do more than once in their lifetime. Even if lightning does strike twice and you obtain information that suggests that another law is being broken, the lessons that you will have learned from your first time through the system will pale in comparison to what an experienced whistleblower lawyer has learned over the course of their career. 

This comes with several repercussions. By hiring an experienced whistleblower lawyer:

1. You drastically improve your ability to gather more evidence of the alleged legal violation
2. You can take steps to ensure you are not detected by the subject of your investigation
3. You significantly increase the odds that the law enforcement agency takes action on your case
4. You can do what is necessary to maximize the share of your recovery from the case’s proceeds
5. You can invoke your rights to be immune from retaliation and take the legal actions that you are entitled to take if you are retaliated against for your whistleblowing activities
6. You can take the necessary steps to ensure that your anonymity is protected and no one learns that it was you who blew the whistle

As Dr. Nick Oberheiden, a whistleblower attorney at Oberheiden P.C., points out, “Getting a whistleblower attorney involved in your case as soon as you can will likely pay huge dividends in the long run. Conducting the investigation into the purported wrongdoing is dangerous, and numerous whistleblowers who have refused to hire a lawyer early on have lost their case when the subject of their investigation found out about their prying and took corrective action to make sure it stopped immediately.”

Answers to 3 Frequently Asked Questions

1. How Much are Whistleblower Awards?

The fact that the AML Whistleblower Program rewards whistleblowers with 10 to 30 percent of the proceeds of the case does not answer everyone’s questions in this regard. The answer just begs the follow-up question: “How much are the proceeds of the case?”

Unfortunately, because U.S. anti-money laundering laws are so new, there are not a lot of data points to paint a reliable picture of how much the average AML enforcement action recovers. 

However, what few data points that we do have suggest that AML and sanctions law whistleblowers can recover vast sums for their efforts. Just recently, Danske Bank agreed to a $2 billion resolution of a case involving its failure to comply with AML law in its Estonia branch, did not disclose the risks that this created to its other customers, and defrauded people and other banks as a result.

2. How Risky is AML or Sanctions Whistleblowing?

It depends on the specific case, but AML and sanctions violation whistleblowing is likely, on average, to be significantly riskier than in other subject areas. The players involved are often criminal enterprises and the financial systems that they have taken to using, precisely because of their shady business dealings. While blowing the whistle on any misconduct can be a risky endeavor, blowing it on money laundering and the evasion of U.S. sanctions can put you in close contact with some dangerous individuals and organizations.

3. What Steps are Taken to Preserve My Anonymity?

Given the risky landscape of blowing the whistle on sanctions violations or money laundering, law enforcement goes to far greater lengths to keep your identity a secret than in some other types of whistleblowing cases. Unlike in many other whistleblower cases, your name will not be mentioned during the case, including when you are paid your award.

If protecting your identity is paramount – and it often is, in these cases – getting legal representation is even more important. Your lawyer provides another layer between you and your case. This layer of insulation can make it much more difficult for someone to find out who is really behind the enforcement action that you set in motion.