During a speech at the ABA's National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco unveiled a new pilot whistleblower reward program designed to address existing gaps in whistleblower incentive initiatives, including the SEC whistleblower program. The Department of Justice (DOJ) plans to disclose program details within the next 90 days and aims to launch it later this year, intending to offer fresh incentives for individuals to report misconduct.
Similar to the SEC whistleblower award's requirement of "original information," the DOJ's program would provide awards to whistleblowers who contribute to the discovery of significant corporate or financial misconduct previously unknown to the DOJ.
The program's statutory foundation relies on the existing authority to provide awards for information leading to civil or criminal forfeitures. Specifically, 28 U.S.C. § 524 (c)(1)(C) empowers the Attorney General to offer awards for information or assistance leading to a civil or criminal forfeiture involving any federal agency participating in the Department of Justice Assets Forfeiture Fund.
Monaco outlined four key principles or "guardrails" for the program. The DOJ would only make payments:
1. After ensuring all victims have been appropriately compensated.
2. To individuals providing truthful information not already known to the government.
3. To those not directly involved in the criminal activity.
4. In cases lacking existing financial disclosure incentives, including qui tam or other federal whistleblower programs.
The introduction of the DOJ's new pilot whistleblower reward program addresses a notable gap in the Anti-Money Laundering Act whistleblower reward statute (AMLA). AMLA's definition of "monetary sanctions," eligible for whistleblower awards, excludes forfeiture. Given that forfeiture is a common remedy in anti-money laundering and sanctions evasion enforcement actions, the AMLA's limitations impede the scope of monetary sanctions from which the Financial Crimes Enforcement Network (FinCEN) can draw to pay whistleblower rewards. The DOJ's decision to utilize civil and criminal forfeitures as a basis for whistleblower awards serves as an incentive for individuals to report instances of money laundering and sanctions evasion.
Furthermore, the pilot program significantly expands the potential violations under the Foreign Corrupt Practices Act (FCPA) for which whistleblowers may qualify for awards. While the SEC whistleblower program currently awards individuals for FCPA violations committed by issuers, and related action awards when the DOJ takes enforcement actions based on the same original information provided to the SEC, resulting in SEC-ordered monetary sanctions exceeding $1 million, the CFTC can also provide awards for whistleblower disclosures related to violations of the Commodity Exchange Act involving foreign corrupt practices. Until the introduction of this new DOJ whistleblower pilot program, whistleblowers lacked incentives to report FCPA violations falling outside the SEC or CFTC jurisdictions.
Monaco emphasized the DOJ's interest in attracting disclosures related to three specific types of violations:
1. Criminal abuses within the U.S. financial system.
2. Foreign corruption cases beyond the SEC's jurisdiction, encompassing FCPA violations by non-issuers and breaches of the recently enacted Foreign Extortion Prevention Act.
3. Domestic corruption cases, particularly those involving illicit corporate payments to government officials.
The newly introduced DOJ whistleblower reward program, coupled with initiatives encouraging companies to self-disclose violations and pilot programs designed to promote early and voluntary self-disclosure of criminal conduct by individual participants in specific non-violent offenses, establishes compelling incentives for prompt reporting and cooperation with government investigations. Monaco's call to "knock on our door before we knock on yours" underscores the importance of proactive engagement.
A recent study by the Transactional Records Access Clearinghouse revealed a steady decline in the DOJ's prosecution of white-collar crime over the past decade, with the majority of criminal referrals for such offenses being closed without prosecution. The introduction of the DOJ's new whistleblower reward program holds the potential to reverse this trend.
Whistleblower reward programs have proven highly effective in combating corporate fraud. SEC whistleblower disclosures, for instance, have resulted in enforcement actions with monetary sanctions surpassing $6 billion and have facilitated the SEC in returning over $1 billion to affected investors. Qui tam actions under the False Claims Act have enabled the DOJ to recover more than $75 billion. With a demonstrated track record of success, these programs continue to serve as crucial tools in the fight against white-collar crime.
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