This article was originally featured in the February 6, 2023 edition of All Rise.
The Anti-Money Laundering (AML) Whistleblower Improvement Act was passed by the United States Senate as part of the Omnibus Budget and spending package in December 2022 and is already impacting the whistleblower and qui tam landscape.
The structure of the AML follows that of the Dodd-Frank Act, which established the whistleblower programs for the Securities and Exchange Commission and the Commodity Futures Trading Commission. AML specifically targets Russian oligarchs who have funneled and protected their funds in Western banks and real estate by establishing a program to incentivize individuals across the globe to report money laundering and sanctions-busting schemes. The Act's expansion also covers whistleblowers who disclose violations of U.S. sanctions.
Under the AML program, the whistleblower would receive 10% to 30% of the value of fines collected from their actions via a $300 million fund created from fines collected by the Departments of Justice (DOJ) and Treasury.
The AML had been a key legislative item for advocacy groups on Capitol Hill, such as the National Whistleblower Center (NWC), whose mission is to support claimants in their efforts to expose and help prosecute corruption and other wrongdoing. NWC Executive Director Siri Nelson said the award provisions level the playing field for whistleblowers and witnesses outside the U.S. "who may not benefit as much from the confidentiality and anti-retaliation components."
"[Foreign] whistleblowers need the promise of rewards for quality information in order to take the risk of communicating with the U.S. government," Nelson said. "These whistleblowers are often in situations [which] may result in their lives being threatened or having to relocate to safety."
Nelson added that the passage of the AML should worry prospective defendants.
"Claims submitted today have been under preparation for some time, and many of these whistleblowers were just waiting for the AML law to pass so they could have some security in filing," she said. "Now that the AML program promises rewards, no money launderer or money laundering enabler is safe."
AML's influence became apparent last month in the wake of two high-profile charges: on January 20, the DOJ arrested and announced criminal charges against British and Russian businessmen for facilitating sanctions evasion of the Russian oligarch's $90 million yacht; on January 23, the DOJ announced charges against Charles F. McGonigal, a former Special Agent in Charge of the FBI New York Counterintelligence Division, and a former Soviet and Russian diplomat with violating U.S. sanctions against another Russian oligarch. McGonigal is one of the highest-ranking former FBI officials ever charged with a crime.
Private firms with experience in the practice area are paying close attention to AML-related developments.
"This legislation considerably broadens the potential sources for whistleblower claims," said Bienert Katzman Littrell Williams Partner Daniel Goldman. As previously reported, Bienert's whistleblower practice made headlines in 2017 for securing a favorable resolution on behalf of the whistleblower in United States of America et al. v. Celgene Corporation. The result was a $280 million settlement—the second-largest recovery recorded in a non-intervened case brought under the False Claims Act.
Goldman added that the whistleblower's profile could change due to the AML.
"While AML and sanctions-related compliance concerns used to be an area of focus only for large financial institutions," Goldman said, "today, AML and sanctions-related issues affect a wide range of industries, from cryptocurrency exchanges and payment processors to real estate and art market participants."
Justin Smulison is a professional writer who regularly contributes to Best Lawyers. He was previously a reporter for the New York Law Journal and also led content and production for the Custom Projects Group at ALM Media. In addition to his various credited and uncredited writing projects, he has developed global audiences hosting and producing podcasts and audio interviews for professional organizations and music sites. JustinSmulison.contently.com
