Treasury Department Unveils Website for Reporting Fraud and Money Laundering

Quick Hits

• FinCEN has launched a confidential webpage for reporting tips on fraud, money laundering, and sanctions violations, enhancing support for whistleblowers.
• Whistleblowers reporting violations to FinCEN are protected from retaliation by their employers and may receive rewards ranging from 10 percent to 30 percent of monetary sanctions that exceed $1 million, once new regulations are finalized.

Q: What types of whistleblower tips are considered under this new website?

A: FinCEN’s Office of the Whistleblower accepts tips related to bank or mortgage fraud, wire or check fraud, identity theft, money laundering, U.S. sanctions violations, tax evasion, online scams, and government benefit fraud schemes. FinCEN helps to enforce the Bank Secrecy Act of 1970, the U.S. Patriot Act of 2001, the Anti-Money Laundering Act of 2020, the International Emergency Economic Powers Act, the Trading with the Enemy Act, the Foreign Narcotics Kingpin Designation Act, the Corporate Transparency Act, and federal regulations covering reporting and recordkeeping requirements for banks, money services businesses, and other financial institutions.

Q: Can you explain more about the types of fraud FinCEN is looking to uncover?

A: In a bulletin, FinCEN gave examples of misconduct by financial institutions, including failing to conduct customer due diligence, falsifying trade documentation, failing to comply with a Geographic Targeting Order, and having insufficient controls to detect virtual currency investment scams and “smurfing,” which is a money-laundering technique of breaking large cash deposits into smaller amounts to evade bank reporting thresholds. It also gave examples of fraud to circumvent customer verification and due diligence requirements, including using stolen or fake identities, creating “deepfake” identity documents, lying about providing government services, and impersonating a government agency.

Q: What types of employers may be subject to FinCEN enforcement actions?

A: FinCEN regulates banks, credit unions, money transmitters, currency exchangers, check cashers, and issuers of traveler’s checks and money orders. It also regulates stockbrokers, investment advisers, loan and finance companies, and pawnbrokers.

Q: What steps can employers take now?

A: Employers may wish to remind employees about the proper avenues to report misconduct internally. Such internal reporting can provide the employer with an opportunity to investigate and remediate misconduct in case an employee also makes a report to FinCEN under its whistleblower program. Additionally, employers may consider reviewing and updating their retaliation policies to encourage receipt of internal reports. However, employers cannot prevent an employee from reporting a possible violation of law to a government agency.

Q: What are the legal protections for FinCEN whistleblowers?

A: An employer is prohibited from discharging, demoting, suspending, threatening, blacklisting, harassing, or discriminating against a whistleblower in the terms and conditions of employment or post-employment because of any lawful act done by the whistleblower. Lawful acts include participating in an investigation and reporting misconduct that the whistleblower reasonably believes could constitute a legal violation.

Q: Do financial whistleblowers receive rewards for providing information that leads to successful enforcement?

A: Under the whistleblower program, if the information leads to monetary sanctions exceeding $1 million, the financial whistleblower may receive between 10 percent and 30 percent of what was collected in monetary sanctions. FinCEN plans to publish a regulation to fully implement whistleblower incentive provisions in the federal code, as amended by the Anti-Money Laundering Act of 2020 and the Anti-Money Laundering Whistleblower Improvement Act of 2022. Once that federal regulation is finalized, FinCEN will begin processing and paying awards.

Ogletree Deakins’ Whistleblower and Compliance Practice Group will continue to monitor developments and will post updates on the Ethics/Whistleblower blog as additional information becomes available.

Jane A. Norbergis a shareholder in Ogletree Deakins’ Washington, D.C., office and the former chief of the Office of the Whistleblower at the Securities and Exchange Commission.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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