In recent weeks, major anti-money-laundering enforcement actions have highlighted the critical role of whistleblowers in government efforts to curb illegal movement of funds.
The German raids of Deutsche Bank, U.S. indictments of three employees and a client of Panamanian law firm Mossack Fonseca, and an earlier Danske Bank money-laundering investigation were all attributable to whistleblowers.
Together, they demonstrate why Congress should act to create whistleblower protections and incentives to encourage individuals with information about illegal money laundering to come forward. Legislation modeled after existing whistleblower reward regimes would deter wrongdoing even where traditional compliance programs and law enforcement are inadequate to the task.
Financial institutions know just how hard it is to combat money laundering. In recent years, money laundering has grown with the internationalization of our financial systems, and AML compliance requirements have grown along with it. As a result, banks have been pouring increasing resources into compliance departments, fulfilling “know your customer” requirements and investigating specific identified transactions, at enormous costs.