The Anti-Money Laundering Act of 2020 Gets a “Glow Up”: Congress Strengthens Enforcement by Enhancing Financial Incentives and Clarifying Whistleblower Eligibility

On December 29, 2022, President Biden signed the Anti-Money Laundering Whistleblower Improvement Act (“the Act”) into law, overhauling the Anti-Money Laundering Act of 2020 (“AMLA”).  When initially passed, the AMLA met with extensive criticism by plaintiff-side whistleblower attorneys for failing to set a defined guaranteed rate for whistleblower awards, with the potential awards ranging from zero percent to thirty percent for identifying wrongful conduct in the anti-money laundering area.  In response to this criticism and to correct other “shortcomings,” Congress amended the law in 2022 through its omnibus budget to expand enforcement measures within the United States and beyond its borders by clarifying who can be a whistleblower and the rewards for successfully raising compliance complaints.  Below, we delve into these changes and their significance for employers.  Essentially, these changes will increase employers’ potential liability for retaliation claims by emboldening newly eligible whistleblowers and their lawyers to raise non-compliance complaints.

Clarifying the Minimum Award for Whistleblower Awards

First, the Act clarifies the minimum floor for potential whistleblower awards.  Specifically, the Act provides that when the government collects “monetary sanctions” exceeding $1 million from an enforcement action, a whistleblower is now guaranteed at least ten percent and may receive up to thirty percent of the amount collected.  This ten percent minimum award rate does not apply to whistleblower awards for “related actions,” which may be paid by another whistleblower award program for their information.  In that case, a whistleblower may receive less than ten percent of the collected amount.  This guaranteed award also does not apply to forfeiture actions.

The “Financial Integrity Fund”

Second, to better fund whistleblower awards under the AMLA, the Act also created the “Financial Integrity Fund (“the Fund”).  The Fund can hold up to $300 million exclusively for whistleblower awards.  The Department of Treasury will administer this Fund and can do so without congressional funding.  Instead, the Fund will rely on any monetary sanctions collected by the Secretary of State or Attorney General through enforcement actions, including criminal forfeitures, restitutions, and fines.

Clarifying Whistleblower Eligibility

Third, the Act clarifies the eligibility status for whistleblowers.  Under the Act, an individual need not have U.S. citizenship to be eligible as a whistleblower.  Additionally, the AMLA itself broke new ground by explicitly recognizing that individuals in audit and compliance work, who learn about unlawful conduct, such as money laundering, through their everyday job duties can be whistleblowers.  To date, the status of these employees under other whistleblower programs, like Dodd-Frank and the SEC, has been subject to highly charged debate.

What Does This Mean for Employers?

The Act increases employers’ exposure to potential liability arising from retaliation claims.  As noted, historically, employees in compliance and audit roles have not necessarily been eligible to act as whistleblowers.  Yet, these employees are the most likely to discover compliance issues and raise them. Notably for employers, identifying when an individual, whose job duties encompass flagging concerns is acting as a “whistleblower” (as opposed to simply doing their job) can and often does present challenges.  As a reminder, the AMLA contains robust anti-retaliation protections applicable to complaints raised internally and to federal enforcement agencies.  In addition, the AMLA provides generous remedies for successful retaliation claims, including reinstatement, double back-pay, and attorneys’ fees.  As such, the Act’s award clarification, coupled with the AMLA’s remedies and expansive whistleblower eligibility, will likely encourage compliance and audit employees and the plaintiff’s bar to lodge internal and external complaints of non-compliance.  So, from now on, employers must treat each comment about non-compliance by audit and compliance employees with the utmost care in order to avoid exposure to liability for retaliation.

What Should Employers Do Now?

These added clarifications, expansive protections, and specific remedies can pose a potential liability minefield for employers.  To limit potential exposure, employers should:

• Treat internal complaints, especially concerns raised by employees in audit and compliance roles, with the utmost care; consider in this regard taking note when/if a compliance or audit professional repeatedly flags an issue or protests the ultimate remedial action taken.
• Double down on compliance efforts such as auditing existing “speak-up” policies and investigation protocols and investing in training, particularly of managers.