On December 29, 2022, President Biden signed a new whistleblower law that significantly increases the risk and cost of whistleblower claims for domestic and overseas financial services institutions that must be cognizant of anti-money laundering (AML) laws and regulations. This covers 26 categories of institutions, including banks, branches and agencies of foreign banks, broker-dealers, insurance companies, operators of credit card systems, mutual funds, certain casinos, and travel agencies. (The full list of covered entities appears at 31 U.S.C. § 5312.)

The Anti-Money Laundering Whistleblower Improvement Act (the “Act”) significantly strengthens the Anti-Money Laundering Act (AMLA), portions of which were enacted on January 1, 2021, which provided incentives and protections to whistleblowers who report original information to their employer, the Secretary of the Treasury, or the Attorney General that leads to the successful enforcement of an AML action and a monetary sanction exceeding $1 million.

The Act broadens the scope of the law to cover reporting of violations of financial management rules for executive agencies; sanctions on foreign nations, entities, or individuals identified as enemies of the United States; and sanctions on foreign narcotics traffickers. The Act also provides for a funding structure and statutory minimum awards to successful whistleblowers.

Each of these changes increases the likelihood that employers that perform work in the financial sector,...

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