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Whistleblower Protections under the Anti-Money Laundering Act of 2020

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Alex Cotoia, Regulatory Manager and Compliance Consultant at the Volkov Law Group, re-joins us for a posting on whistleblower protections. Alex can be reached at [email protected].

When Congress overrode former President Donald J. Trump’s veto of the 2021 National Defense Authorization Act (“NDAA”) in January of this year, it simultaneously enacted the Anti-Money Laundering Act of 2020 (“AMLA”) into law. AMLA significantly expands upon the regulatory framework of the Bank Secrecy Act (“BSA”) and represents—by many accounts—the single most aggressive legislative effort to curb money laundering and terrorist financing since the adoption of the USA PATRIOT Act in the aftermath of 9/11. Although much of the editorial focus has been on the expansion of the BSA’s reach under AMLA (into emerging markets like the cryptocurrency trade, for instance), it is equally important to take note of AMLA’s emphasis on enhancing protections for would-be whistleblowers.

First, AMLA broadly defines “whistleblower” as any individual (or two or more people acting jointly) “who provide[] information relating to a violation of this subchapter … to the employer of the individual or individuals, including as part of the job duties of the individual or individuals, or to the Secretary [of the Treasury] or the Attorney General“ (emphasis added). This intentionally broad definition arguably permits even individuals involved in the compliance, audit and legal departments of an organization to provide credible, original information to financial regulators and to reap the rewards of a successful enforcement action. Because AMLA eliminates the $150,000 reward cap previously contained in the BSA and replaces it with a thirty-percent ceiling, would-be whistleblowers possessing critical company information and facing a corporate culture of ignorance or resistance, may choose to avail themselves of AMLA’s enticing proposition.

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Second, unlike Dodd-Frank, the anti-retaliation provisions of AMLA—contained in 31 U.S.C. §5323(g)—extend to whistleblowers who report through both internal channels (“[to] a person with supervisory authority over the whistleblower, or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct”) and external channels (directly to either Treasury or DOJ). Whistleblowers who face adverse employment consequences in connection with such reports may initiate an action with the Secretary of Labor. Should the whistleblower prevail in that action, the Secretary may order the whistleblower’s reinstatement, award compensatory damages and double backpay with interest, and provide for the reimbursement of the whistleblower’s reasonable attorney fees, litigation costs, and expert witness fees. Exhaustion of a whistleblower’s administrative remedies is a statutory predicate to filing suit in federal district court. Under AMLA, should the Secretary fail to issue a final decision within 180 days of filing, “and there is no showing that such a delay is due to the bad faith of the claimant,” the whistleblower may initiate an action in federal district court irrespective of the amount in controversy.

Crucially, like other contemporary whistleblower statutes, the whistleblower’s initial burden of proof in retaliation cases brought under AMLA is de minimis. By virtue of Section 5323(g)(3)(A)(i), AMLA incorporates the burden-shifting framework contained in the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (“AIR21” Act). Under those provisions, to prevail on a claim of unlawful retaliation, inter alia, the whistleblower must show by mere preponderance that the conduct of the employer was a “contributing factor” in the adverse employment decision. Under established case law, the term “contributing factor” has been construed to mean “any factor, which alone or in connection with other factors, tend to affect in any way the outcome of the decision.” Consol. Rail Corp. v. U.S. Dep’t of Lab., 567 F. App’x 334, 338 (6th Cir. 2014) (emphasis added). As the Third Circuit noted in Araujo v. New Jersey Transit Rail Operations, Inc., this test is “specifically intended to overrule existing case law,” which historically required a whistleblower to prove that her conduct was a “significant,” “substantial,” or “predominant” factor in the personnel action. Araujo, 708 F.3d 152, 158 (3d Cir. 2013). Thus, even temporal proximity between the protected activity and the adverse action (in conjunction with other forms of circumstantial evidence) may be sufficient to satisfy the whistleblower’s initial burden of establishing a prima facie retaliation case.

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The key takeaway for organizations of all shapes and sizes is to regularly monitor and assess the effectiveness of an entity’s internal reporting and case management functions. Simply establishing a hotline for reporting infractions of the law and/or violations of the company’s code of conduct is insufficient. Rather, the organization must: (1) routinely assess whether the company culture promotes ‘speaking up’; (2) ensure that all whistleblower claims are investigated promptly, thoroughly, and confidentiality by qualified personnel; and (3) ensure management is appropriately trained to avoid circumstances that could give rise to retaliation claims.

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