Sunday Read: AML Progress
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The whistleblower and qui tam landscapes started off strong in 2023, following Congress passing the Anti-Money Laundering (AML) Whistleblower Improvement Act as part of the Omnibus Budget and spending package in December 2022.
AML targets Russian oligarchs by establishing an effective whistleblower program to incentivize individuals across the globe to report money laundering and sanctions-busting schemes. The bill had been in front of Congress for two years and is modeled on the whistleblower provisions of the Dodd-Frank Act, which established the SEC Whistleblower Program.
In this Sunday Read, the National Whistleblower Center (NWC) chronicles significant developments that have arisen in the two months since AML was passed and looks to ways to strengthen the law.
New Year, Fresh Whistleblower Claims
The U.S. Department of Justice (DOJ) hit the ground running with whistleblower claims being filed under the AML. On January 20, the DOJ announced charges against two businessmen, Vladislav Osipov, a Russian national, and Richard Masters, a United Kingdom national, for allegedly facilitating a sanctions evasion and money laundering scheme concerning a $90 million, 255-foot luxury yacht owned by sanctioned Russian oligarch Viktor Vekselberg.
Just three days later, on January 23, the DOJ announced charges against Charles F. McGonigal, a former Special Agent in Charge of the FBI New York Counterintelligence Division, and Sergey Shestakov, a former Soviet and Russian diplomat with violating U.S. sanctions against another Russian oligarch, Oleg Deripaska. McGonigal is one of the highest-ranking former FBI officials ever charged with a crime.
The DOJ asserted that in 2021 McGonigal and Shestakov, “conspired to provide services to Deripaska, in violation of U.S. sanctions imposed on Deripaska in 2018.” As reported by Whistleblower Network News, the defendants in both cases face money laundering charges as well as sanctions evasion charges. McGonigal’s arrest was especially significant, as he isreportedly one of the highest-ranking former FBI officials ever charged with a crime.
NWC Celebrates AML Victory, Visits Congress
The passage of the AML was a key agenda item for the NWC, which had advocated for itsreforms since its introduction to Congress. In January, NWC hand-delivered thank you letters to many leading House members and senators critical to the AML’s passage. NWC posted some choice pictures on LinkedIn of delivering the letters to House representatives such as Alma Adams (D-North Carolina), a member of the U.S. House Committee on Financial Services.
The visit to Capitol Hill reflected the full embrace of the reopening of U.S. Government buildings in 2023. It also recognized the significance of the improvement to the FinCEN whistleblower program.
“We are so grateful that our supporters, and the support of Kohn, Kohn and Colapinto, LLP and Whistleblower Network News, were able to garner the support of Senators Chuck Grassley and Raphael Warnock, and Representatives Adams, Rosa DeLauro, and Vicente Gonzalez to make this critical improvement a reality,” said NWC Executive Director Siri Nelson. “Thanks to these leading legislators, President Biden was able to do the right thing for whistleblowers and set the FinCEN program up for success.”
NWC leadership was quoted in legal and business publications with regard to AML, further establishing the reputation of the Center as a leading authority and resource on whistleblower law. This includes:
• NWC Founder and Chairman of the Board Stephen Kohn featured in, “Banks With Russia Ties Targeted by US Treasury Whistleblowers.” Bloomberg (Feb. 14)
• Nelson featured in, “Whistleblower Legislation Opens the Doors for More International Claims.” Best Lawyers (Feb. 6)
• Stephen Kohn contributed, “New AML Whistleblower Law is a Game Changer in Enforcing Russian Sanctions.” Reuters (Jan. 18)
A Look To The Future
The passage of the AML is a bipartisan victory, Nelson noted, and the high-profile charges filed in January are just a starting point for the DOJ, advocacy groups and legal professionals.
But as with any new legislation, Nelson expressed cautious optimism. She noted that the AML whistleblower office needs financial support “and should look to other programs for operational guidance.” Furthermore, now that NWC has the ears of vital lawmakers in Washington, she hopes they can strengthen the program in an effort to also demonstrate its value and importance to the public.
“Congress needs to make sure the program has the funding it needs. The public [also] needs to understand that for every dollar spent on these programs thousands come back in sanctions and untold amounts are prevented from being stolen or spent to fix problems caused by fraud,” Nelson said. “For example, in this case, anti-money laundering enforcement undermines Russia’s attacks on Ukraine. The President of Ukraine said U.S. sanctions are a major tool in the war against Russia. Every dollar invested in ending money laundering today saves hundreds of thousands of dollars we may have to spend helping Ukraine to win against Russia’s attacks. FinCEN needs to set up an approachable website so more people can understand what is available and publish clear instructions for filing.”
“Congress needs to continue to enact Dodd-Frank-style laws which include anonymity, anti-retaliation, and rewards for example at the FTC, to ensure that fraudsters have nowhere to run. Whistleblowers are the key to stopping fraud.”
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NWC fights to bolster whistleblower programs and raise awareness about the value of all whistleblowers. As described in this Sunday Read, NWC’s effort garner real results for whistleblowers. As a 501(c)(3) non-profit our work is made possible with the support of our generous donors. Please consider donating $50 today to help us continue to educate the public about whistleblower best practices and the role whistleblowers play in putting an end to fraud and corruption around the world.
This story was written by Justin Smulison, a professional writer, podcaster and event host based in New York.
