Thad McBride And Jamie Parkinson Address FinCEN Whistleblower Proposal

Bass, Berry & Sims attorneys Thad McBride and Jamie Parkinson co-authored an article for National Law Review highlighting recent proposed rulemaking from a busy Financial Crimes Enforcement Network (FinCEN).

On April 1, FinCEN proposed a rule to formalize a whistleblower mechanism for U.S. anti-money laundering (AML) laws and economic sanctions violations, which would establish procedures for submitting tips, define award eligibility, outline application and adjudication processes and describe available protections.

“In the context of the multiple recent actions taken by FinCEN, the proposed rule is further evidence that Treasury is prioritizing the detection and prevention of AML violations, including matters implicating U.S. sanctions,” Thad and Jamie said.

The structure of the proposed mechanism tracks with established whistleblower models from other government agencies, like the Securities and Exchange Commission (SEC), and it would cover both AML and sanctions violations. Under the new rule, awards would be available for whistleblowers when information leads to successful judicial or administrative action by the U.S. Treasury or Department of Justice that results in monetary fines or penalties in excess of $1 million. They may also receive awards tied to “related actions” brought by authorities based on the same information.

Given the easier mechanism and incentivization for surfacing AML and sanctions issues, it would become even more important for organizations to assess and maximize internal compliance measures. “Regulated entities need to ensure internal reporting systems are robust, well-communicated, and readily available to personnel,” the authors explained. “When reports are submitted, an appropriate, timely investigation must be conducted. Maintaining a credible reporting process is the best way to ensure that personnel seek to address matters internally instead of blowing the whistle to the government.”

The full article, “FinCEN Update: Proposed Rule Would Operationalize AML and Sanctions Whistleblower Awards,” was published by the National Law Review on June 5 and is available online.