The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has signaled a significant shift in its enforcement strategy by referencing the Financial Crimes Enforcement Network’s (FinCEN) whistleblower program in two recent enforcement actions. This move indicates a growing reliance on whistleblowers to unearth potential sanctions violations, highlighting the escalating stakes for companies under U.S. economic sanctions regulations.
Evolution of the Whistleblower Program
Historically linked with the Bank Secrecy Act, the whistleblower program was established under the Anti-Money Laundering Act of 2020. It was further expanded by the Anti-Money Laundering Whistleblower Improvement Act in late 2022 to include violations of OFAC-administered sanctions. This expansion is a critical development, given that in the previous year, only two out of seventeen OFAC enforcement actions referenced the whistleblower program. In contrast, this year, all announced actions have cited it. This pattern underscores a deliberate pivot towards integrating whistleblower insights into the sanctions enforcement process.
Inter-Agency Collaboration and Whistleblower Incentives
The increase in references to the whistleblower program in OFAC’s enforcement actions points to enhanced inter-agency collaboration and the Treasury Department’s readiness to potentially offer substantial monetary rewards to whistleblowers. These incentives are considerable; whistleblowers whose information leads to enforcement actions resulting in monetary sanctions exceeding $1 million may receive between 10% to 30% of the recovered amounts. Moreover, the program’s strong anonymity and anti-retaliation provisions provide significant protection to whistleblowers, encouraging more individuals to come forward with information.
Recent Developments and Future Plans
FinCEN’s director, Andrea Gacki, noted that since the beginning of 2024, over 100 tips had been received, processed, and referred to OFAC and other agencies. The planned formalization of the whistleblower program’s rules, expected to be outlined in a Notice of Proposed Rulemaking in 2024, is anticipated to further solidify this framework.
Compliance Implications for Companies
The active encouragement of whistleblower reports by OFAC and the increasing number of tips suggest that companies may face heightened risks of discovery and enforcement for non-compliance with U.S. sanctions. This evolving landscape necessitates that companies maintain robust compliance measures, effectively manage internal disclosures of potential violations and foster a proactive culture of compliance.
As OFAC continues to integrate the FinCEN whistleblower program into its enforcement strategy, the landscape for economic sanctions compliance is set to become more challenging, emphasizing the need for vigilant and adaptive compliance strategies within organizations.
