Sunday Reading: How Two Major Congressional Spending Bills Will Affect Critical Whistleblower Protections
Much attention has been given to huge and complex bills that will have impacts throughout the United States. Recently President Biden’s Build Back Better bill has been the centerpiece of the Biden administration’s legislative agenda and is currently making its way through Congress. Also in the spotlight is the National Defense Authorization Act (NDAA), the Senate recently voted to advance toward a floor debate. NWC has been closely monitoring the progress of these two bills — as they will potentially have significant implications for whistleblower protections in the United States. We decided to devote this weekend’s Sunday Reading to explaining these bills and how “omnibus” legislation like this impacts whistleblower protections.
These two spending packages are “omnibus” bills, meaning they are single pieces of legislation that will be decided in a single vote but will contain numerous independent measures dealing with a variety of different issues.
The NDAA, for instance, is a military spending bill that includes hundreds of different amendments. Several of these amendments specifically relate to the Anti-Money Laundering Act (AML), which was originally passed by Congress as part of the National Defense Authorization Act of 2020. The AML was a major overhaul of the nation’s money laundering laws and modernized protections for whistleblowers who report Bank Secrecy Act violations.
However, as originally enacted, the AML law had serious problems that substantially undermined its effectiveness. For example, the law did not extend anti-retaliation protections to employees of Federal Deposit Insurance Corporation (FDIC) of Credit Union insured institutions. Moreover, while the AML provided for monetary awards for whistleblowers who reported violations, these awards were not mandatory unlike other whistleblower laws such as the False Claims Act and Dodd-Frank Act. This meant that whistleblowers would have no guarantee of being compensated even if their information resulted in a successful prosecution. There was also no designated fund from which whistleblower awards could be paid out. As such, the AML lacked critical incentives needed to encourage whistleblowers to report illegal money laundering activity.
In light of these serious deficiencies, NWC has been actively involved in negotiations over amendments to the AML as part of this year’s NDAA. Fortunately, we successfully pushed for the inclusion of additional whistleblower protections that will likely be included in the final legislation. If the amendments NWC and others support are passed, the Anti-money laundering provisions will include mandatory minimum awards for whistleblowers and will establish a tax neutral whistleblower award fund to compensate AML whistleblowers. But there is still work to be done to include anti-retaliation provisions.
The Build Back Better Act is another major legislative spending item that contains critical funding for climate and infrastructure projects. However, as currently written, the bill also includes two provisions that create exemptions to False Claims Act (FCA) liability by creating blanket immunity from liability when banks fail to exercise due diligence, violate Fair Housing Act regulations, or even directly violate federal laws such as the Truth in Lending Act.
The FCA is one of the most powerful anti-fraud laws in the U.S. and allows whistleblowers, known as qui tam “relators,” to bring suit against individuals or entities who defraud the federal government. The FCA will be especially important in the context of the Build Back Better Act, which provides for billions of dollars in taxpayer funding for first-time homebuyers.
The inclusion of these exemptions that would prevent the government from recovering money from fraudsters undermines this otherwise well-meaning program designed to help aspiring homeowners. And the opportunity to close these potentially disastrous loopholes in the FCA could have easily been lost in the Biden Administration’s large and complex Build Back Better bill without the dedicated attention of whistleblower advocates at National Whistleblower Center.
Some of the most powerful financial institutions in the world have hired armies of well-connected lobbyists in order to gut whistleblower protections in both the NDAA and the Build Back Better Act. NWC doesn’t have an army of lobbyists. We have generous supporters, like you, whose contributions allow us to continue advocating for courageous whistleblowers who seek to hold powerful actors accountable.
