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More than 50 people have secretly flagged anti-money laundering deficiencies and sanctions evasion to U.S. officials in the month since Congress bolstered a fledgling, federal whistleblower program, two sources with direct knowledge of the matter told ACAMS moneylaundering.com.

Treasury’s Financial Crimes Enforcement Network, or FinCEN, created a whistleblower office in 2021 pursuant to the AML Act, but a lack of funding to cover payouts to informants slowed implementation.

U.S. lawmakers moved to address the shortfall on Dec. 20 by creating a revolving reward fund of up to $300 million supported by fines and settlements rather than congressional appropriations, and by setting a new, minimum payout of 10 percent to whistleblowers who supply original information that leads to at least $1 million in penalties from Treasury or the Justice Department.

Sources told moneylaundering.com that dozens of tips previously on hold for months, and sometimes longer, were filed shortly after Congress inserted a provision to establish the revolving fund into year-end spending legislation that President Joe Biden signed into law on Dec. 29.

Whistleblowers receive a letter acknowledging receipt of their information by FinCEN, which plans to formally, publicly propose a regulatory structure for submitting tips in the coming months.

A spokesperson for the bureau did not return a request for comment.

The Securities and Exchange Commission, which established a whistleblower program in 2010 pursuant to the Dodd–Frank Wall Street Reform and Consumer Protection Act, issued 46 pages of regulations in 2011 outlining its criteria for calculating rewards and when anti-retaliation protections apply, among other details.

Like FinCEN, the SEC rewards eligible tipsters anywhere from 10 percent to 30 percent of penalties from successful enforcement actions, as does the Commodity Futures Trading Commission, which also created a whistleblower program pursuant to Dodd-Frank.

The SEC’s program has led to $5 billion in penalties and $1.3 billion of combined payouts to more than 200 whistleblowers. The CFTC’s program has meanwhile generated $3 billion in penalties and more than $300 million in rewards.

“You can see the clear intent here is to bring this into line with other existing, established whistleblower programs,” said AnnaLou Tirol, former deputy director of FinCEN. “I think with the funding, the 10 percent floor and the expansion to sanctions, there is an enormous amount of potential.”

Initially limited to violations of the Bank Secrecy Act, FinCEN’s whistleblower program now also covers breaches of U.S. sanctions, such as those promulgated under the International Emergency Economic Powers Act and Foreign Narcotics Kingpin Designation Act.

Given the dramatic expansion of U.S. financial and commercial restrictions against Russian individuals and businesses over the past year, sanctions evasion may initially generate more tips from whistleblowers than AML breaches, said John Podvin, partner at the Otteson Shapiro law firm in Denver.

The congressional overhaul of FinCEN’s program dovetails with plans by federal prosecutors and regulators to more frequently hold compliance officers responsible for the violations of their employers, possibly by requiring them to formally attest to the efficacy of their AML programs as part of any deferred prosecution agreement or other resolution.

“Certifications can put compliance officers in a very tough spot,” said Podvin.

Compliance officers generally do not hold the purse strings at their respective companies, which leaves the correction of AML deficiencies essentially outside their control.

“What’s a compliance officer to do if they’re not sure? Lose their job? Resign?” Podvin said.

Blowing the whistle may become a viable third option for compliance officers who fail to persuade their employers to upgrade their AML programs, but only if FinCEN robustly protects them from retaliation and pays high-enough rewards to offset the risks they take by informing on their employers, Podvin said.

“In my experience, once the regulators or the Justice Department start investigating, usually the higher-up folks at a company pretty much know where it’s coming from,” Podvin said, adding that investigations and related settlements sometimes take years to conclude. “Being a whistleblower is not fun.”

Contact Fred Williams at fwilliams@acams.org