Anti-Money Laundering Program Gets Tougher With Adoption of Whistleblower Enhancements

Crime will always pay as long as wrongdoers can launder their illicit proceeds through the financial system. Finally, the U.S. has a stronger whistleblower program in place to help combat that trend.

Enacted over a veto by former President Trump this month, the National Defense Authorization Act for Fiscal Year 2021 provides for dramatically enhanced incentives for whistleblowers who aid anti-money laundering efforts. The new law removes a $150,000 cap on potential awards AML whistleblowers can receive, and allows successful tipsters to receive up to 30 percent of a monetary penalty collected.

The new initiative, resembling a successful program by the U.S. Securities and Exchange Commission, could make a big difference in encouraging more anti-money laundering whistleblowers to come forward. Money laundering is a big business, and much of it currently flies under the radar.

This is a major upgrade in our arsenal of tools for reining in money laundering. Undoubtedly, this will help encourage more honest people who might otherwise fear retaliation to step forward, and alert authorities to bad behavior.

According to the World Economic Forum, an estimated $2.2 trillion in proceeds is generated globally through illicit activities such as human trafficking, the sale of illegal drugs, tax evasion, and smuggling. Much of it is “washed,” or made to appear legitimate, though networks of shell companies as well as major corporations and financial firms.

Under the new provisions, the enhanced AML whistleblower program will be handled through the Treasury Department’s Financial Crimes Enforcement Network, otherwise known as FinCEN. The agency is at the leading edge of combatting money laundering, terrorism financing, and other financial crimes.

In addition to the big boost in potential awards, the new law enhances protection for AML whistleblowers, including prohibiting the demotion, suspension, or blacklisting of tipsters for speaking out. The provisions, which revise the Bank Secrecy Act, also impose steeper fines and other penalties for violators.

Globally, money laundering scandals involving major corporations can be huge. One of the largest in recent years was a $229 billion money-laundering scheme that involved Denmark’s largest lender Danske Bank. Trouble began in 2007 when the financial institution took over a branch in Estonia, which was sweeping in large deposits from illicit sources in Azerbaijan, Moldova, and Russia. A whistleblower first came forward in 2013 raising concerns about the funds, but it took years before management took action.

The Danish bank’s troubles pale compared to two other major money laundering scandals involving big financial firms. In 2011, it was discovered that Wachovia, a bank now owned by Wells Fargo, laundered $378.4 billion from Mexican drug cartels.

Similarly, a consortium of journalists recently found that HSBC continued to provide banking services to Ponzi schemers, shell companies tied to drug traffickers, and a variety of other alleged criminal networks even while under federal probation for previous anti-money laundering lapses.

This month, CapitalOne agreed to pay $290 million in penalties to FinCEN for willful anti-money laundering violations and doing business with a portfolio of check-cashing companies tied to the Genovese organized crime family.

From mobsters to drug cartels to human traffickers, the worst of the world’s criminals are enabled by companies and financial firms looking the other way and handling their money. We will all benefit from a tougher anti-money laundering program that holds these firms to account.


Steve Halperin

New York trial attorney Steve T. Halperin is a well-known litigator with extensive knowledge of whistleblower laws and the New York False Claims Act. He has 28 years of experience as one of New York’s top tier attorneys. From the Manhattan offices of HalperinBikel, Steve’s whistleblower cases can run the gamut from lawsuits against healthcare. Whistleblowers: A New Yorker’s Step By Step Guide systems and providers cheating on New York Medicaid to private companies providing worthless services, or false billings by government contractors. With hundreds of winning verdicts and favorable settlements in healthcare and corporate cases, attorney Halperin’s meticulous preparation, courtroom acuity, and client-centered professionalism create remarkable outcomes.

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