AML & Sanctions Whistleblowing in the US: 2024 Update
Money laundering and sanctions violations tips from those aware of illegal actions within an organization are crucial for identifying illicit activities. That's why, in 2022, the US government passed a new act incentivizing whistleblowers to come forward with information. But it's now 2024. In this report, sanctions.io examines what's changed since then and the current state of play.
But before we do that, let's quickly remind ourselves about the game-changing AML and sanctions whistleblower developments that passed in 2022.
The Anti-Money Laundering Whistleblower Improvement Act (2022)
The Act
In December 2022, President Joe Biden signed the AML Whistleblower Improvement Act into law, partly in response to the 2022 Russian invasion of Ukraine, aiming to enhance the identification and seizure of Russian assets.
As many of you reading will remember, this was a significant milestone. Why?
Because now, both domestic and overseas financial services companies (you can read the complete list of covered entities by clicking here) with AML compliance and reporting obligations face increased legal risk and financial costs from whistleblower claims
And to keep this as simple as possible in the interest of brevity, the critical point is this: AML and sanctions whistleblowers now have stronger financial incentives and increased legal protection for reporting violations to the US government.
The Numbers
The figures speak volumes - a successful enforcement action may net a whistleblower between 10% and 30% of the total monetary sanctions collected.
Given that penalties can reach millions of dollars, that's enough to incentivize individuals to step forward with valuable information to share with Uncle Sam. It's also worth noting that a whistleblower for the US government can be anyone, no matter where in the world, their nationality, and whether they are an employee of the accused organization or not.
Recommended reading: 3 Key Takeaways From Deutsche Bank's $186 Million Sanctions and AML Penalty
More About Sanctions Tips and Whistleblower Protection
In the previous sections, we mentioned how whistleblowers coming forward with tips regarding AML and sanctions violations are both included in the AML Whistleblower Improvement Act 2022.
But let's make this crystal clear.
Whistleblower incentives and protection related to US economic sanctions laws, administered by the Office of Foreign Assets Control (OFAC), have slipped under the radar for many. Even Forbes called the sanctions whistleblower program, in the wake of the Russian invasion of Ukraine, "a little-known tool for employees added to DOJ's anti-Russia arsenal."
And it absolutely is a massive development. Before President Biden signed on the dotted line in 2022, no US law protected individuals who reported sanctions violations.
Let's now return to 2024 and examine the current state of play.
State of Play in 2024: FinCEN In the Crosshairs?
In 2024, it's impossible to talk about AML and sanctions whistleblowing in the US without talking about criticism directed at the Treasury's Financial Crimes Enforcement Network, better known by its acronym, FinCEN.
This article is not delivering an opinion on the topic. FinCEN does an incredible and vital job safeguarding the US and broader international financial system, where the US dollar is a cornerstone currency.
But all compliance professionals worldwide should be aware that, in 2024, US senators are pressuring FinCEN to fully implement its AML Whistleblower Program.
So what's the issue?
Senators Grassley, Warren, and Warnock (who cosponsored the AML Whistleblower Improvement Act) said in a letter sent to FinCEN in early 2024 that the failure to propose rules and set up an AML Whistleblower Program website "is unacceptable."
The crux of the problem, it seems, is primarily the delay in FinCEN establishing a dedicated, public website for its whistleblower program.
Will the website launch in 2024? Only time will tell. But one thing is certain: whistleblowers are picking up the phone to FinCEN.
Cash App Whistleblower Allegations to FinCEN in 2024
Let's examine a high-profile and tangible example of alleged 2024 AML whistleblowing in the US - as it may be a sign of similar events to come.
In February, NBC News revealed that FinCEN is probing whether Cash App, a mobile payment service with a reported 51 million monthly transacting users, 'leaves the door open' to money launderers and terrorists.
It's essential to note that FinCEN has yet to comment or release a statement. However, according to NBC News, two whistleblowers said in complaints to FinCEN and other federal regulators that the app worked with sanctioned individuals and did not conduct proper AML checks.
As reported by AML Intelligence, US multinational payments card services firm - Visa - is also under the spotlight, with whistleblowers telling FinCEN that "Visa loosened its AML processes for Cash App prepaid cards."
At the time of writing, the Cash App whistleblower allegations are still playing out, so we won't delve into it further. However, it's something sanctions.io is likely to revisit in the future.
Be sure to follow sanctions.io's LinkedIn page to receive further updates.
Closing Thoughts and How sanctions.io Boosts AML and Sanctions Compliance
In this report, we've focused on whistleblower laws and regulations implemented by the US government. We reviewed the regulatory changes since 2022, how FinCEN is responding to them, and an alleged whistleblowing case in 2024.
But it's important to remember this: The global trend (not just in the US) is increasing protection and incentives for employees to step forward.
For example, the UK is close to establishing more robust protections for whistleblowers with the Parliament's Protection for Whistleblowing Bill edging forward.
And what does that mean?
AML and sanctions compliance processes, such as AML and sanctions screening, are more critical than ever for mitigating the risk of tremendous financial penalties and reputational damage.
About sanctions.io
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