Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
When Congress overrode President Trump’s veto of the National Defense Authorization Act on January 1, 2021, it enacted the Anti-Money Laundering Act (AMLA), which was part of the defense authorization bill. In doing so, Congress implemented the most sweeping anti-money-laundering statute since the USA PATRIOT Act. In addition to a number of regulatory reforms and new disclosure requirements, the AMLA has put into place new whistleblower protections, adding to the range of statutes that have effectively created anti-retaliation provisions for virtually every activity regulated by federal statute. Employment attorneys and human resource professionals need to be aware of these changes.
For many years, the federal Bank Secrecy Act (BSA) authorized payments to whistleblowers who provide original information leading to the government’s collection of fines, civil penalties or forfeitures relating to BSA violations.1 Examples of common violations include breaking down cash transactions into sums lower than $10,000 to avoid filing a Currency Transaction Report (CTR), structuring a transaction with one or more financial institutions to evade CTR filing requirements, using foreign entities to receive criminally derived money from the United States to another country and then having that money recycled back into the U.S. banking system, and failing to follow all applicable compliance and filing requirements.
The statute capped payments at $150,000, however, and afforded the Treasury Department discretion in deciding whether to issue an award in any amount up to that limit. These aspects curtailed the impact of the BSA on money-laundering enforcement and made it much less effective than the bounty program established by the SEC under the Dodd-Frank Act (DFA). As discussed below, the AMLA strengthens the incentive program because it (1) narrows the government's discretion to pay an award, (2) increases the potential amount of whistleblower awards, and (3) implements protections specific to money-laundering whistleblowers, in a manner largely modeled after the DFA.
The AMLA covers the wide range of financially based organizations set forth in the BSA. This includes banks, branches and agencies of foreign banks, broker-dealers, insurance companies, operators of credit card systems, mutual funds, certain casinos, and travel agencies, among the 26 covered categories.2 However, the law now places under the BSA’s purview any person or business that engages in the transmission of currency, funds or value that substitutes for currency, meaning that organizations dealing in cryptocurrency now come within the statute’s reach. Persons involved in the sale of antiquities are also now covered.
Whistleblowing Protection and Procedure
The AMLA defines “whistleblower” as any individual (or two or more people acting jointly) “who provides information relating to a violation of this subchapter ... to the employer of the individual or individuals, including as part of the job duties of the individual or individuals, or to the [Treasury] Secretary or the Attorney General.” It is noteworthy that the statute does not require that the alleged violation be “material,” and that there is no exclusion for compliance officers or internal auditors. This latter component means that companies cannot defend against a retaliation claim on the grounds that employees who reported a violation internally were obligated to do so in any event as part of their job. In fact, nothing in the statute directs the Treasury Department to devise implementing rules that lead to such an exclusion for compliance officers or internal auditors. Thus, an employee involved in compliance who makes a good-faith report of a BSA violation, either internally or to the authorities, must be treated with the same degree of care as a whistleblower under any other statute.
The new whistleblower protection of the AMLA appears at 31 U.S.C. § 5323(g). This section bars employers from discharging, demoting, threatening or harassing employees who provide information relating to money laundering and BSA violations to the attorney general, secretary of the treasury, regulators and others. Unlike under the DFA, internal whistleblowers who report suspected wrongdoing to their employer instead of to the government are also afforded protection by Section 5323(g). Note that institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) and Federal Credit Union Act (FCUA) are exempt from these new protection provisions, but that employees of those entities can still rely on existing whistleblower protections, like those provided by the Federal Deposit Insurance Act and the Federal Credit Union Act, when seeking redress from suspected retaliation.
In other respects, the anti-retaliation provisions resemble protections under the DFA and the Sarbanes-Oxley Act. Complaints are filed initially with the Department of Labor and if they are not resolved within six months (assuming that the delay was not caused by claimant’s bad faith), employees can file actions in federal court and have a jury trial. Available relief can include reinstatement with no loss in seniority, compensatory damages, counsel fees, double back pay with interest added, and other appropriate remedies regarding the prohibited conduct.
Expanded Financial Incentives for Whistleblowers
The new statute provides that the secretary of the treasury "shall" pay an award to those who provide original information leading to successful enforcement of various money-laundering laws, if the SEC obtains sanctions of $1 million or more. As with the DFA, certain individuals, like regulatory and law enforcement officials and those who participated in the wrongdoing, are prohibited from receiving an award. To incentivize reporting, the AMLA replaced the $150,000 award cap, which was discretionary in any event, with a payment ceiling of 30% of the government's collection, if the monetary sanctions imposed exceed $1 million and which is now mandatory unless the reporting individual is disqualified. Again, like the DFA, factors to be taken into consideration by the government when deciding the amount of the award include the significance of the information, the degree of assistance provided and the programmatic interest of Treasury in deterring violations. Treasury retains the discretion to make nominal payments, and there is no right to appeal the amount awarded. However, the "monetary sanctions" figure on which the reward will be based excludes forfeiture, restitution and victim compensation payments, and since the government frequently seeks large forfeiture judgments when resolving money-laundering actions, this provision may significantly limit whistleblower awards.
Bottom Line for Employers
Companies covered by the new statute must be careful in dealing with the AMLA. They need to treat carefully any employees who raise concerns about potential BSA violations, regardless of the seriousness of the alleged violation or the position of the person who makes the claim. Just as with potential claims under Sarbanes-Oxley or the DFA, they need to document employee performance carefully so as to justify decisions regarding employees who raise concerns. Finally, they need to be prepared to investigate and remediate any claimed BSA violations quickly to minimize any potential recovery by the government and any resulting payment to the employee.
1 31 U.S.C. § 5323
2 The full list of covered entities appears at 31 U.S.C. §5312.