Published On: Mon, Jun 29th, 2020

The Bipartisan Illicit Cash Act Would Fight Corruption, Protect Whistleblowers

These days in Washington, the word bipartisan is not frequently used. But Senate Bill 2563, the Illicit Cash Act, is legislation that four Republicans and four Democrats from the Senate Banking Committee have introduced.  It is intended to update the decades-old anti-money laundering laws, in part by calling on the Treasury to establish exam and supervision priorities to supplement and guide financial institutions.

Photo/donkeyhotey donkeyhotey.wordpress.com

The legislation also requires periodic law enforcement feedback to financial institutions on their suspicious activity reports, a streamlining of reporting requirements, a review of currency transaction report and suspicious activity report thresholds, and a review of current guidance to remove outdated or unnecessary regulations and guidance.

Among the most important parts of the legislation are whistleblower provisions, which follow best practices under current US laws.  Among the provisions for whistleblowers are: 

  • Whistleblowers can raise their concerns anonymously and confidentially. This provision permits insiders to keep their jobs, while providing essential information to law enforcement. If a company does not know who the whistleblower is, they cannot retaliate against the whistleblower.
  • The information obtained from the whistleblower must be “derived from the independent knowledge or analysis of a whistleblower.” This provision prevents opportunists from benefiting from the law and incentives true “insiders” to come forward.
  • The information provided by the whistleblower is “not known to the Treasury, the Department of Justice, or an appropriate regulator, unless the whistleblower is the original source of the information.” This requires that the whistleblower provide true “original” information. 
  • The evidence of wrongdoing “that led to the successful enforcement” action must be “voluntarily provided” by the whistleblower. This reduces the risk that opportunists will benefit from the law. 
  • The statute contains an anti-retaliation provision based on “best practices” found in other federal anti-retaliation laws, and thus provides some job protection to whistleblowers. However, retaliation cases are historically very difficult to prove, and damages are limited. Thus, the confidentiality provisions in the law will ultimately be the most important provision protecting the jobs and safety of the whistleblowers.

Victor Carlström via picuki.com

Money laundering is an increasingly common problem worldwide with several notable cases involving whistleblowers standing up to report financial crimes that involve international banks.

One such case, which has resulted in a recently filed lawsuit in New York is a $150 billion money laundering scheme alleged by whistleblower Victor Carlström, a top global financial broker from Sweden. Carlström says that Swedish financial giants Swedbank and Folksam collaborated with government officials and departments to pull off the largest global case of money laundering in history.

Carlström was a top broker at Folksam, where he said he was instructed to steal from clients, but declined to do so. He was let go soon after by then-CEO Jens Henriksson, now the CEO of Swedbank. After blowing the whistle, Carlström and his companies were subject to dozens of investigations by Swedish government agencies, he said, while not one money laundering query was begun by the Swedish government.

Initial motions in the case are due this summer and it is too early to know if there are any US banks or companies involved in the scheme outlined by the whistleblower.

Author: James Daniel

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