Whistleblower Rewards Law: Fixing Money Laundering Loopholes

In a new article published by Reuters, Kohn, Kohn & Colapinto founding partner Stephen M. Kohn outlines the loopholes undermining the effectiveness of the whistleblower reward provisions in the Anti-Money Laundering (AML) Act of 2020. In addition to highlighting the AML Act’s shortcomings, Kohn details the major efforts underway to help implement or fix the law.

Two of the major loopholes in the law which Kohn details are the exclusion of all employees at FDIC insured financial institutions and credit unions from the law’s anti-retaliation protections and the lack of a mandatory award minimum in the law’s whistleblower reward provisions. According to Kohn, these “devastating” loopholes in the AML Act “have crippled its implementation and will undermine its effectiveness.”

Kohn reports that “there are major efforts underway to help implement or fix the law.” A bipartisan bill cosponsored by Senators Charles Grassley (R-IA) and Raphael Warnock (D-GA) is designed to fix the major loopholes in the reward-payment provisions. Furthermore, the Department of Treasury is currently drafting rules to implement the whistleblower program, an opportunity to address some of the shortcomings of the law. According to Kohn, both these efforts “have the potential to transform the law from a feckless first step to end money laundering into a modernized effective law enforcement tool.”