Proposed Rule2026-06271
Whistleblower Incentives and Protections
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Published
April 1, 2026
Issuing agencies
Treasury DepartmentFinancial Crimes Enforcement Network
Abstract
FinCEN is proposing a rule to establish a whistleblower program that offers incentives and protections to encourage individuals who have information about potential violations of the Bank Secrecy Act (BSA), International Emergency Economic Powers Act (IEEPA), Trading With the Enemy Act of 1917 (TWEA), and Foreign Narcotics Kingpin Designation Act (Kingpin Act) to voluntarily report such information (the "Whistleblower Program"). The proposed rule would implement section 6314 of the Anti-Money Laundering Act of 2020 (AML Act) and the Anti-Money Laundering Whistleblower Improvement Act (AML Whistleblower Improvement Act), which were enacted into law as part of the National Defense Authorization Act for Fiscal Year 2021 (FY21 NDAA) and the Consolidated Appropriations Act of 2023, respectively. The Whistleblower Program will contribute to the U.S. government's efforts to safeguard the financial system from illicit use, promote national security, and combat money laundering, terrorist financing, proliferation financing, and related crimes. This notice of proposed rulemaking invites comments from the public regarding all aspects of the proposed rule, as well as comments in response to specific questions.
Full Text
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<title>Federal Register, Volume 91 Issue 62 (Wednesday, April 1, 2026)</title>
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[Federal Register Volume 91, Number 62 (Wednesday, April 1, 2026)]
[Proposed Rules]
[Pages 16328-16386]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06271]
[[Page 16327]]
Vol. 91
Wednesday,
No. 62
April 1, 2026
Part III
Department of the Treasury
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Financial Crimes Enforcement Network
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31 CFR Part 1010
Whistleblower Incentives and Protections; Proposed Rule
Federal Register / Vol. 91, No. 62 / Wednesday, April 1, 2026 /
Proposed Rules
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Part 1010
RIN 1506-AB57
Whistleblower Incentives and Protections
AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: FinCEN is proposing a rule to establish a whistleblower
program that offers incentives and protections to encourage individuals
who have information about potential violations of the Bank Secrecy Act
(BSA), International Emergency Economic Powers Act (IEEPA), Trading
With the Enemy Act of 1917 (TWEA), and Foreign Narcotics Kingpin
Designation Act (Kingpin Act) to voluntarily report such information
(the ``Whistleblower Program''). The proposed rule would implement
section 6314 of the Anti-Money Laundering Act of 2020 (AML Act) and the
Anti-Money Laundering Whistleblower Improvement Act (AML Whistleblower
Improvement Act), which were enacted into law as part of the National
Defense Authorization Act for Fiscal Year 2021 (FY21 NDAA) and the
Consolidated Appropriations Act of 2023, respectively. The
Whistleblower Program will contribute to the U.S. government's efforts
to safeguard the financial system from illicit use, promote national
security, and combat money laundering, terrorist financing,
proliferation financing, and related crimes. This notice of proposed
rulemaking invites comments from the public regarding all aspects of
the proposed rule, as well as comments in response to specific
questions.
DATES: Written comments on this proposed rule must be submitted on or
before June 1, 2026.
ADDRESSES: Comments must be submitted by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2026-0067 and RIN 1506-AB57.
<bullet> Mail: Financial Crimes Enforcement Network, P.O. Box 39,
Vienna, VA 22183. Refer to Docket Number FINCEN-2026-0067 and RIN 1506-
AB57.
FOR FURTHER INFORMATION CONTACT: FinCEN's Regulatory Support Section by
submitting an inquiry at <a href="http://www.fincen.gov/contact">www.fincen.gov/contact</a>.
SUPPLEMENTARY INFORMATION:
I. Scope
In this notice of proposed rulemaking, FinCEN is proposing and
seeking comment on regulations that would implement the statutory
framework set forth in section 5323 of title 31 of the United States
Code, 31 U.S.C. 5323, for a whistleblower program--the ``Whistleblower
Program.'' The proposed rule sets out the procedures a whistleblower
must follow to be eligible for payment of an award by FinCEN and the
protections afforded to whistleblowers who provide information.
Specifically, the proposed rule would:
<bullet> Define key terms;
<bullet> Set forth procedures for whistleblowers to submit
information about potential violations;
<bullet> Describe the requirements a whistleblower must meet to be
eligible for an award;
<bullet> Set forth procedures for whistleblowers to submit an award
application;
<bullet> Describe the process FinCEN will use to adjudicate award
applications; and
<bullet> Describe certain protections afforded to whistleblowers.
As required by 31 U.S.C. 5323(i), FinCEN has consulted with the
Department of Justice (DOJ) on this proposed rule.
II. Background
A. The AML Act and the AML Whistleblower Improvement Act
On January 1, 2021, Congress enacted the FY21 NDAA, which included
the AML Act as a component.\1\ Along with other updates to the BSA that
aimed to strengthen the U.S. anti-money laundering/countering the
financing of terrorism (AML/CFT) framework, section 6314 of the AML Act
amended section 5323 of title 31 in the U.S.C. (``section 5323'', or
``31 U.S.C. 5323'') to provide for enhanced whistleblower award
provisions and otherwise set out a framework for a whistleblower
program to be implemented by the Secretary of the Treasury
(Secretary).\2\
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\1\ The Anti-Money Laundering Act of 2020 (AML Act) is Division
F, Sec. Sec. 6001-6511, of the William M. (Mac) Thornberry National
Defense Authorization Act for Fiscal Year 2021 (the FY21 NDAA),
Public Law 116-283 (Jan. 1, 2021).
\2\ The legislative framework generally referred to as the Bank
Secrecy Act (BSA) consists of the Currency and Foreign Transactions
Reporting Act of 1970, as amended by the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (USA PATRIOT Act), Public Law 107-56
(Oct. 26, 2001), and other legislation, including the AML Act. The
BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1960, 31 U.S.C.
5311-5314 and 5316-5336, and includes notes thereto, with
implementing regulations at 31 CFR Chapter X. The AML Act, section
6003(1) (Definitions), defines the BSA as section 21 of the Federal
Deposit Insurance Act (12 U.S.C. 1829b), chapter 2 of title I of
Public Law 91-508 (12 U.S.C. 1951 et seq.), and 31 U.S.C. chapter
53, subchapter II. Division F of the FY21 NDAA, section 6314 of the
AML Act, among other things, amends section 5323 of subchapter II of
chapter 53 of title 31, United States Code (U.S.C.), and retitles it
``Whistleblower incentives and protections.'' For purposes of
defining a covered statute under the Whistleblower Program, the term
BSA means subchapter II of chapter 53 of title 31, United States
Code.
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The enhanced award provisions of the AML Act provide for the
ability to make an award to one or more eligible whistleblowers who
voluntarily provided original information to the employer of the
whistleblower(s), including as part of the job duties of the
whistleblower(s), the Department of the Treasury (Treasury), or DOJ,
that led to the successful enforcement of a covered action or related
action.\3\ Under the AML Act, covered actions only pertain to
violations of the BSA and are defined as judicial or administrative
actions brought by Treasury or DOJ that result in monetary sanctions
exceeding $1,000,000.\4\ With regard to the amount of an award, the AML
Act authorizes payment to the whistleblower of up to 30 percent of
monetary sanctions collected in certain circumstances. The payment of
awards is also subject to amounts made available by appropriation.\5\
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\3\ 31 U.S.C. 5323(a)(5), (b). While section 5323 generally
refers to the ``Secretary of the Treasury'' or the ``Secretary,''
the proposed rule generally refers to the ``Department of the
Treasury.'' However, when the proposed rule refers to the Secretary
in the role of the Whistleblower Program's administrator, the
proposed rule refers to ``FinCEN,'' which is the Treasury bureau to
which the Secretary delegated responsibility for implementing and
overseeing the BSA, which would include the Whistleblower Program.
Moreover, whereas section 5323 generally refers to the ``Attorney
General,'' the proposed rule refers to the ``Department of
Justice.'' The purpose of using these references is to make the
proposed rule easier for the public to read and understand.
\4\ 31 U.S.C. 5323(a)(1).
\5\ 31 U.S.C. 5323(b).
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The AML Act also repealed 31 U.S.C. 5328, which contained certain
protections for whistleblowers who were employees or former employees
of financial institutions or nonfinancial trades or businesses. The AML
Act replaced these provisions and consolidated all BSA whistleblower-
related provisions into the new section 5323. Specifically, the amended
section 5323 prohibits employers (subject to certain exclusions for
banks and credit unions) from directly or indirectly retaliating
against a whistleblower who provides information, testifies, or
cooperates with the government in
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accordance with section 5323 in the terms and conditions of their
employment or post-employment.\6\ In addition to these anti-retaliation
protections, the AML Act also amended section 5323 by adding a
confidentiality provision, which addresses the use and sharing of
certain whistleblower information by Treasury, DOJ, and other
government entities.\7\
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\6\ 31 U.S.C. 5323(g)(1). The whistleblower protections in
section 5323(g)(1) do not apply with respect to any employer that is
subject to 12 U.S.C. 1831j or 12 U.S.C. 1790b, 1790c, which
separately provide protections against retaliation for reporting
possible violations of the law. See 31 U.S.C. 5323(g)(6).
\7\ 31 U.S.C. 5323(g)(4).
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The AML Whistleblower Improvement Act, passed by Congress in
December 2022, further amended section 5323 to expand the scope of the
whistleblower program by allowing awards to be paid to one or more
eligible whistleblowers who voluntarily provide original information
relating to certain violations of IEEPA, TWEA, and the Kingpin Act, and
for conspiracies to violate those statutes and the BSA.\8\ This
substantially expanded the scope of covered actions beyond violations
of the BSA to include violations of U.S. trade and economic sanctions,
among other violations of IEEPA. The AML Whistleblower Improvement Act
mandated that eligible whistleblowers receive a minimum of 10 percent
of monetary sanctions collected in covered actions or related actions,
to ensure whistleblowers are appropriately compensated given the strong
public interest in receiving the information and the lack of expense to
taxpayers. To ensure whistleblowers timely receive awards, the AML
Whistleblower Improvement Act also created a revolving fund that
receives deposits through collected penalties from certain enforcement
actions from which awards can be paid without the need for further
appropriations.
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\8\ The Anti-Money Laundering Whistleblower Improvement Act (AML
Whistleblower Improvement Act) is Title IV of Division AA of the
Consolidated Appropriations Act, 2023, Public Law 117-328 (Dec. 29,
2022); 31 U.S.C. 5223(a)(1).
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B. Overview of Covered Statutes
Under the statutory framework of the Whistleblower Program, the
receipt of a monetary award by a whistleblower is predicated on the
successful enforcement of a ``covered action,'' which is an
administrative or judicial action taken by Treasury or DOJ under
certain ``covered statutes.'' \9\ Pursuant to section 5323, the
``covered statutes'' are the BSA, IEEPA, TWEA, and the Kingpin Act.\10\
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\9\ 31 U.S.C. 5323(a).
\10\ Id. Specifically, the covered statutes are subchapter II of
chapter 53 of title 31, United States Code, chapter 35 or section
4305 or 4312 of title 50, United States Code, and the Foreign
Narcotics Kingpin Designation Act (21 U.S.C. 1901 et seq.)).
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The purpose of the BSA is to combat money laundering, financing of
terrorism, and other illicit finance activity, including by individuals
associated with drug cartels and transnational organized criminal
groups.\11\ Congress has authorized the Secretary to administer the BSA
and to require certain records and reports that ``are highly useful in
criminal, tax, or regulatory investigations, risk assessments, or
proceedings,'' or in ``intelligence or counterintelligence activities,
including analysis, to protect against terrorism.'' \12\ In turn, the
Secretary has delegated the authority to implement, administer, and
enforce compliance with the BSA and its associated regulations to the
Director of FinCEN (Director).\13\ The Secretary has also authorized
the Director to redelegate any authority vested in the Director to an
officer or employee of an agency other than Treasury, when authorized
by law.\14\ The authority to examine certain designated types of
financial institutions for compliance with the BSA has been delegated
to appropriate federal functional regulators.\15\
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\11\ 31 U.S.C. 5311.
\12\ 31 U.S.C. 5311(1). Section 358 of the USA PATRIOT Act added
language expanding the scope of the BSA to intelligence or counter-
intelligence activities to protect against international terrorism.
Section 6101 of the AML Act added language further expanding the
scope of the BSA but did not amend these longstanding purposes.
\13\ Treasury Order 180-01 (Jan. 14, 2020), <a href="https://home.treasury.gov/about/general-information/orders-and-directives/treasury-order-180-01">https://home.treasury.gov/about/general-information/orders-and-directives/treasury-order-180-01</a>.
\14\ Id.
\15\ 31 CFR 1010.810(b).
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Consistent with its enforcement authority, FinCEN may impose civil
money penalties on financial institutions, nonfinancial trades or
businesses, and other persons that violate the BSA.\16\ Generally, the
authority to impose such penalties has not been redelegated.\17\
However, certain enforcement authorities have been redelegated to the
Internal Revenue Service (IRS), including the authority to enforce BSA
provisions regarding records and reports of foreign bank and financial
accounts and to investigate criminal violations of certain reporting
requirements.\18\
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\16\ 31 U.S.C. 5321.
\17\ 31 CFR 1010.810(d).
\18\ 31 CFR 1010.810(c)(2), 1010.810(g).
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In addition to the BSA, the other covered statutes are IEEPA, TWEA,
and the Kingpin Act. IEEPA authorizes the President of the United
States to take certain actions following a declaration of national
emergency. These actions include, but are not limited to, the
regulation of transactions subject to U.S. jurisdiction involving
property in which any foreign country or foreign national has an
interest to deal with any unusual or extraordinary threat to the
national security, foreign policy, or economy of the United States.
Likewise, provisions of TWEA authorize certain measures during times of
war and national emergency, including but not limited to the regulation
of transactions subject to U.S. jurisdiction involving any property in
which a foreign country or foreign national has an interest, as well as
seizure and holding of foreign-owned property in trust. The Kingpin Act
authorizes economic and other financial sanctions on significant
narcotics traffickers and their networks.
Collectively, these statutes (IEEPA, TWEA, and the Kingpin Act) are
enforced by Treasury and DOJ. For example, Treasury's Office of Foreign
Assets Control (OFAC) enforces economic sanctions programs based on
IEEPA, TWEA, and the Kingpin Act. Another component of Treasury, the
Office of Investment Security (OIS), currently administers the IEEPA-
based rules implementing Executive Order (E.O.) 14105, ``Addressing
United States Investments in Certain National Security Technologies and
Products in Countries of Concern'' (Treasury's Outbound Investment
Security Program).\19\ Furthermore, DOJ administers the IEEPA-based
rules implementing E.O. 14117, ``Preventing Access to Americans' Bulk
Sensitive Personal Data and United States Government Data by Countries
of Concern'' (Data Security Program) \20\ to
[[Page 16330]]
protect U.S. national security from countries of concern that may seek
to collect and weaponize Americans' most sensitive personal data and
government-related data. DOJ also investigates and prosecutes criminal
violations of the covered statutes.
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\19\ See 31 CFR part 850 for regulatory provisions pertaining to
U.S. investments in certain national security technologies and
products in countries of concern implementing E.O. 14105 of Aug. 9,
2023, Addressing United States Investments in Certain National
Security Technologies and Products in Countries of Concern, 88 FR
54867 (Aug. 11, 2025), <a href="https://www.federalregister.gov/documents/2023/08/11/2023-17449/addressing-united-states-investments-in-certain-national-security-technologies-and-products-in">https://www.federalregister.gov/documents/2023/08/11/2023-17449/addressing-united-states-investments-in-certain-national-security-technologies-and-products-in</a>. The
Comprehensive Outbound Investment National Security Act of 2025
(COINS Act, enacted via the FY 2026 NDAA on Dec 18, 2025), codifies
and expands the US Outbound Investment Security Program. Among other
things, the COINS Act directs the Secretary of the Treasury to issue
regulations restricting United States outbound investments in
countries of concern involving certain technologies. The OIS program
regulations that became effective on January 2, 2025, and the
obligations they set out, remain in effect until the Treasury
Department issues regulations pursuant to the COINS Act.
\20\ See 28 CFR part 202 on regulations implementing E.O. 13873
of May 15, 2019, Securing the Information and Communications
Technology and Services Supply Chain, 84 FR 22698 (issued May 15,
2019; published May 17, 2019), <a href="https://www.federalregister.gov/documents/2019/05/17/2019-10538/securing-the-information-and-communications-technology-and-services-supply-chain">https://www.federalregister.gov/documents/2019/05/17/2019-10538/securing-the-information-and-communications-technology-and-services-supply-chain</a>, and E.O. 14117
of Feb. 28, 2024, Preventing Access to Americans' Bulk Sensitive
Personal Data and United States Government-Related Data by Countries
of Concern, 89 FR 15421 (issued Feb. 28, 2024; published Mar. 1,
2024), <a href="https://www.federalregister.gov/documents/2024/03/01/2024-04573/preventing-access-to-americans-bulk-sensitive-personal-data-and-united-states-government-related">https://www.federalregister.gov/documents/2024/03/01/2024-04573/preventing-access-to-americans-bulk-sensitive-personal-data-and-united-states-government-related</a>.
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C. The Objective of the Proposed Rule
The proposed rule sets forth regulations for a FinCEN whistleblower
program that would incentivize whistleblowers to report violations of
the BSA, IEEPA, TWEA, and the Kingpin Act to Treasury, DOJ, or to their
employer. FinCEN expects that the increased submission of such tips
would enhance the ability of Treasury and DOJ to enforce the BSA, U.S.
trade and economic sanctions, the Outbound Investment Security Program,
and the Data Security Program, and to further other U.S. government law
enforcement efforts.
III. Section-by-Section Analysis
This proposed rule would revise the regulations implementing the
BSA in part 1010 (General Provisions) of chapter X (Financial Crimes
Enforcement Network) of title 31, Code of Federal Regulations (CFR).
Specifically, the regulations proposed in this rule would replace the
existing regulations concerning rewards for individuals, which are
currently set forth at 31 CFR 1010.930 (``Rewards for informants''),
and rename the section ``Whistleblower incentives and protections.''
The proposed regulations are organized to generally track the
lifecycle of a whistleblower's interaction with the government,
beginning with the submission of information and continuing through the
receipt of an award.\21\ The proposed regulations are thus organized in
the following order: (a) Definitions; (b) Submission of original
information; (c) Whistleblower eligibility; (d) Submission of an award
application; (e) Award adjudication; (f) Confidentiality and
protections; (g) Appeals; and (h) No amnesty.
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\21\ In designing the proposed Whistleblower Program, FinCEN has
reviewed the rules implementing the SEC and CFTC whistleblower
programs. See 17 CFR 240.21F-1--240.21F-18; 17 CFR 165.
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A. Proposed 31 CFR 1010.930(a)--Definitions
In proposed 31 CFR 1010.930(a), FinCEN defines and further
clarifies certain statutory terms that appear in section 5323 and
defines additional terms important to the implementation of the
program. For purposes of the section-by-section analysis, FinCEN has
summarized definitions in the order they appear in the remaining
sections of the proposed rule. This approach allows FinCEN to explain
these definitions more fully by contextualizing them within the broader
rule.
B. Proposed 31 CFR 1010.930(b)--Submission of Original Information
Proposed 31 CFR 1010.930(b) describes the steps a whistleblower
would be required to follow when submitting original information. A
whistleblower must submit original information to be eligible for an
award. Consistent with section 5323, proposed 31 CFR 1010.930(b)(1)-(2)
describe the steps and timelines a whistleblower would be required to
follow when submitting original information under the Whistleblower
Program.\22\
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\22\ 31 U.S.C. 5323(a)(5)(A).
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1. Definition of the Term ``Original Information''
Proposed 31 CFR 1010.930(b) uses the term ``original information,''
which FinCEN would define in 31 CFR 1010.930(a)(8). This proposed
definition includes the three elements that appear in the statutory
definition of that term at 31 U.S.C. 5323(a)(3), as well as an
additional fourth element proposed by FinCEN. To be eligible for
awards, whistleblowers must satisfy all four elements.
The first element of the ``original information'' definition, as
set forth in proposed 31 CFR 1010.930(a)(8)(i), requires that original
information be derived from the independent knowledge or independent
analysis of a whistleblower. This aligns with the first element of the
``original information'' definition in 31 U.S.C. 5323(a)(3)(A). For
additional clarity, FinCEN is proposing to define the terms
``independent knowledge'' and ``independent analysis'' in the proposed
regulations.
The term ``independent knowledge'' is defined in proposed 31 CFR
1010.930(a)(6) to mean factual information known to the whistleblower
that is not exclusively obtained from publicly available sources.
Importantly, the proposed definition of independent knowledge would not
require that a whistleblower have direct, first-hand knowledge of
potential violations. Instead, independent knowledge may be obtained
from any of the whistleblower's experiences, observations, or
communications, subject to the exclusion for knowledge obtained
exclusively from public sources, such as corporate press releases and
filings, media reports, and information on the internet. Thus, for
example, under proposed 31 CFR 1010.930(a)(6), a whistleblower has
``independent knowledge'' of information even if that knowledge derives
from facts or other information conveyed to the whistleblower by third
parties. An individual may learn about violations of the covered
statutes without being personally involved in the conduct.
In turn, the term ``independent analysis'' is defined in proposed
31 CFR 1010.930(a)(5) to mean the evaluation of information by the
whistleblower, acting alone or in combination with others, in a manner
that results in material insights into or interpretations of the
significance of such information that are not generally known or
available to the public. The proposed definition is intended to
acknowledge that analysis is often the product of collaboration among
two or more individuals. In addition, the proposed definition clarifies
that the term ``independent analysis'' includes the evaluation of
information that may be generally known or available to the public as
long as it results in material insights into or interpretations of the
significance of such information that are not generally known or
available to the public.
The second element of the ``original information'' definition, as
set forth in proposed 31 CFR 1010.930(a)(8)(ii), requires that the
information provided by the whistleblower is not known to Treasury \23\
or DOJ from any other source, unless the whistleblower is the original
source of the information. This requirement aligns with the second
element of the ``original information'' definition in 31 U.S.C.
5323(a)(3)(B). Whether information is already known to Treasury or DOJ
would depend on whether the information was known by
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the team investigating the matter or available through the sources
reasonably accessible to them in the normal course of their job duties.
For example, if a whistleblower provided information about a company
that allegedly violated sanctions, FinCEN would consider the
information establishing the fact of the violative conduct to have been
already known to OFAC if another part of OFAC had already collected
that information and it was reasonably accessible to the OFAC
investigative team.
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\23\ For additional clarity, Treasury would be defined in
proposed 31 CFR 1010.930(a)(11) and would include FinCEN and OFAC.
The definition is also meant to clarify the regulations by
distinguishing between references to FinCEN specifically and
references to Treasury more broadly or its various components. See
also supra note 3 (describing terms used in the proposed rule with
respect to Treasury and DOJ).
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The third element of the ``original information'' definition, as
set forth in proposed 31 CFR 1010.930(a)(8)(iii), requires that the
information not be exclusively derived from an allegation made in a
judicial or administrative hearing, in a governmental report, hearing,
audit, or investigation, or from the news media or any other publicly
available source, unless the whistleblower is a source of the
information. This requirement generally aligns with the third element
of the ``original information'' definition in 31 U.S.C. 5323(a)(3)(C)
with one addition: in order to prevent the submission of information
copied from public sources such as the internet, FinCEN proposes to add
to the list of sources set out in 31 U.S.C. 5323(a)(3)(C) the phrase
``or any other publicly available source.'' \24\
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\24\ Under 31 U.S.C. 5323(a)(3)(C), the term ``original
information'' means information that ``is not exclusively derived
from an allegation made in a judicial or administrative hearing, in
a governmental report, hearing, audit, or investigation, or from the
news media, unless the whistleblower is a source of the
information.''
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The fourth element of the ``original information'' definition, as
proposed in 31 CFR 1010.930(a)(8)(iv), requires the information be
provided to Treasury or DOJ for the first time: (i) after January 1,
2021, for violations of the BSA; or (ii) after December 29, 2022, for
violations of IEEPA, TWEA, and the Kingpin Act and for conspiracies to
violate the BSA, IEEPA, TWEA, and the Kingpin Act. FinCEN will only
make awards for original information that whistleblowers submitted to
FinCEN after the enactment of the statutes that established the
Whistleblower Program and amended its scope, respectively, namely the
AML Act (which provided for incentives to submit original information
about violations of the BSA) and the AML Whistleblower Improvement Act
(which expanded the program to include incentives to submit original
information about violations of IEEPA, TWEA, and the Kingpin Act and
conspiracies to violate the BSA, IEEPA, TWEA, and the Kingpin Act).
2. Proposed 31 CFR 1010.930(b)(1)--Procedures for Submitting Original
Information
Proposed 31 CFR 1010.930(b)(1)(i) requires each whistleblower to
initially submit information to FinCEN using FinCEN's ``Tip, Complaint,
or Referral'' form (``Form TCR'') or a successor form. The form would
be submitted to FinCEN through a secure online portal. The initial
submission of information via a standardized form would enable FinCEN
to receive, review, and track each whistleblower's submission. As
envisioned, FinCEN would automatically assign each Form TCR its own
unique reference number, which would then be used to track the
whistleblower's submission throughout its lifecycle, including
connecting submissions to award applications. Subject to instructions
from FinCEN, the Form TCR also may be used by a whistleblower or a
whistleblower's attorney to submit additional information supplementing
the whistleblower's initial submission of information. The
whistleblower and, if applicable, the whistleblower's attorney, would
be required to certify the information contained in the Form TCR is
true, correct, and complete to the best of their knowledge. FinCEN
notes that if two or more whistleblowers decide to submit a tip
jointly, then each whistleblower still must submit their own respective
Form TCR. Similarly, if an attorney represents two or more
whistleblowers who are submitting a tip jointly, then the attorney
still must submit a Form TCR for each of their whistleblower clients.
Proposed 31 CFR 1010.930(b)(1)(i) also states that information may
be submitted ``in another matter authorized by FinCEN'' to account for
situations in which FinCEN may, at its discretion, waive the
requirement to submit a Form TCR (or a successor form). FinCEN
authorization to submit information in another manner could take
various forms. A whistleblower must comply with the requirements set
forth in proposed 31 CFR 1010.930(b)(1)(i) to be eligible to receive an
award.
FinCEN notes that a whistleblower may submit original information
to FinCEN on their own behalf. Thus, a whistleblower is not required to
hire an attorney to represent the whistleblower in connection with the
submission of information to FinCEN, although the whistleblower may
choose to do so. Moreover, a whistleblower may choose to submit
original information to FinCEN anonymously. A whistleblower who chooses
to submit a Form TCR to FinCEN anonymously may do so on their own
behalf or through an attorney, as provided for in 31 CFR
1010.930(b)(1)(ii). It is the whistleblower's choice whether to retain
an attorney when submitting a Form TCR anonymously.
If an anonymous whistleblower decides not to retain an attorney,
then they should consider including in their Form TCR an email address
or telephone number that investigators may use to contact them.
3. Proposed 31 CFR 1010.930(b)(2)--Original Information Must Be
Submitted to FinCEN
Proposed 31 CFR 1010.930(b)(2) explains that, if a whistleblower
provides original information to a part of Treasury other than FinCEN,
or to DOJ, or to their employer, then the whistleblower must also
provide that same original information to FinCEN within a reasonable
time to be eligible for an award. If a whistleblower provides original
information to a part of Treasury other than FinCEN, or to DOJ, or to
their employer, then FinCEN will consider that the whistleblower
provided original information as of the date of the whistleblower's
first submission of the information to one of these authorities or
persons.
The purpose of the proposal to require whistleblowers to submit
information to FinCEN--even after they have already submitted the same
information to another part of Treasury, or DOJ, or their employer--is
to ensure that each whistleblower's submission is received, reviewed,
and tracked by FinCEN. It is not intended to discourage whistleblowers
from communicating directly with another office of Treasury (like
OFAC), or with DOJ, or their employer.
Furthermore, although whistleblowers are expected to submit
original information in the manner described in 31 CFR 1010.930(b),
FinCEN notes that whistleblowers who submitted original information to
FinCEN before the effective date of a final rule would not need to
resubmit their original information--on a Form TCR or otherwise--should
the rule become effective. Since whistleblowers who submit information
before the rule's effective date would not be able to do so on a Form
TCR, FinCEN would deem their submissions to be ``in another manner
authorized by FinCEN'' under proposed 31 CFR 1010.930(b)(1)(i) and to
be timely for the purpose of proposed 31 CFR 1010.930(b). However,
whistleblowers who submit original information to Treasury or DOJ or
their employer before the effective date of the final rule would still
be required to
[[Page 16332]]
otherwise comply with all requirements set forth in proposed 31 CFR
1010.930 to be eligible to receive an award.
Proposed 31 CFR 1010.930(b)(2) would also state that, as described
in paragraph (c)(5)(iii), certain whistleblowers who obtained
information because they meet the criteria in paragraphs (A) or (B) of
proposed 31 CFR 1010.930(c)(5)(iii) must wait at least one hundred and
twenty (120) calendar days from the date they obtained the information
before providing it to FinCEN to be eligible for an award. As described
below, the rationale for the 120-day waiting period is to provide
entities that invest in strong internal audit and compliance programs
the opportunity to benefit from such programs. The 120-day waiting
period provides these entities the opportunity to review and assess
information that could relate to a violation of a covered statute and,
where they deem it appropriate, address and/or voluntarily disclose the
information to the government. The waiting period is calibrated to help
avoid any incentive for whistleblowers to undermine effective
compliance programs while minimizing any potential harm from delayed
reporting of tips to law enforcement.
Should the proposed rule be finalized, FinCEN intends to provide
separate public guidance as to what constitutes ``reasonable time''
under proposed 31 CFR 1010.930(b)(2), including with respect to
whistleblowers who are subject to the waiting period set forth in
proposed 31 CFR 1010.930(c)(5)(iii). Furthermore, FinCEN notes that
neither Treasury nor DOJ is required to communicate with, inform, or
update whistleblowers regarding investigative, prosecutorial, or
enforcement developments or decisions relating to the information
submitted by a whistleblower.
C. Proposed 31 CFR 1010.930(c)--Whistleblower Eligibility
Proposed 31 CFR 1010.930(c) sets forth the eligibility requirements
for an award under the Whistleblower Program. More specifically,
proposed 31 CFR 1010.930(c)(1)-(4) describes the specific requirements
a whistleblower must meet to be eligible for an award, while proposed
31 CFR 1010.930(c)(5) describes categories of individuals ineligible to
receive an award. Furthermore, proposed 31 CFR 1010.930(c)(6) sets
forth the reasons and procedures for barring an individual from the
Whistleblower Program, as well as the consequences of being permanently
barred.
Consistent with 31 U.S.C. 5323(a)(5), proposed 31 CFR
1010.930(a)(12) would define the term ``whistleblower'' as any
individual who provides, or any two or more individuals acting jointly
who provide, information relating to a possible violation of a covered
statute or a possible conspiracy to violate a covered statute to
Treasury or to DOJ, or to the employer of the individual or
individuals, including as part of the job duties of the individual or
individuals. This would mean that whistleblowers may be U.S. or non-
U.S. natural persons (individuals). However, legal entities and legal
arrangements, such as corporations, limited liability companies (LLCs),
and trusts, could not be whistleblowers under the Whistleblower
Program. The proposed definition aligns with the statutory definition
at 31 U.S.C. 5323(a)(5)(A) with one non-substantive alteration: the
proposed definition references ``covered statute'' as that term is
defined in the proposed rule instead of listing each covered statute by
name and/or citation.\25\
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\25\ Under 31 U.S.C. 5323(a)(5)(A), a ``whistleblower'' is an
individual who provides information relating to a violation of
``[subchapter II of Title 31], chapter 35 or section 4305 or 4312 of
title 50, [or] the Foreign Narcotics Kingpin Designation Act (21
U.S.C. 1901 et seq.).''
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1. Proposed 31 CFR 1010.930(c)(1)--In General
Proposed 31 CFR 1010.930(c)(1) summarizes four specific
requirements a whistleblower must meet to be eligible for an award
under the Whistleblower Program. The first requirement, set forth in
proposed 31 CFR 1010.930(c)(1)(i), is that the whistleblower must have
voluntarily provided original information. The second requirement, set
forth in proposed 31 CFR 1010.930(c)(1)(ii), is that the whistleblower
was the original source of the original information. The third
requirement, set forth in proposed 31 CFR 1010.930(c)(1)(iii), is that
the whistleblower's original information led to the successful
enforcement of a covered action or related action. These three
requirements, as set forth in the proposed regulations, are consistent
with the statutory requirements in 31 U.S.C. 5323(b)(1). The fourth
requirement a whistleblower must meet in order to be eligible for an
award, as set forth in proposed 31 CFR 1010.930(c)(1)(iv), is that a
whistleblower must provide to Treasury and DOJ certain additional
information upon request. Such information could include explanations
and other assistance to allow Treasury and DOJ to evaluate and use the
original information that the whistleblower submitted and testimony or
other evidence relating to whether the whistleblower is eligible or
otherwise satisfies any of the conditions for an award. FinCEN expects
that a whistleblower who wishes to receive an award will cooperate with
Treasury and DOJ in connection with any investigation related to the
whistleblower's original information.
To more fully explain the requirements set out in 31 CFR
1010.930(c)(1)(i)-(iii), the following subsections provide an
explanation of the terms utilized in these provisions and defined in 31
CFR 1010.930(a), as well as certain related terms that are also set
forth in 31 CFR 1010.930(a).\26\
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\26\ However, other concepts (e.g., ``voluntary'' and ``original
source'') that are also utilized in 31 CFR 1010.930(c)(1)(i)-(iii)
appear in subsequent sections of the proposed regulations. For this
reason, these concepts are discussed in the section analysis
corresponding to those proposed regulations.
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a. ``Covered Action'' and Related Terms
The term ``covered action'' is defined in proposed 31 CFR
1010.930(a)(3) to mean any single judicial or administrative action
brought by Treasury or DOJ under a covered statute or for a conspiracy
to violate a covered statute that has been successfully enforced and
results in monetary sanctions exceeding $1,000,000.\27\ The proposed
definition of ``covered action'' is consistent with the statutory
definition of ``covered judicial or administrative action'' at 31
U.S.C. 5323(a)(1), with the addition of references to the terms
``covered statute'' and ``successful enforcement,'' which are also
defined in FinCEN's proposed rule. The term ``covered statute'' is
utilized in lieu of specific references and/or citations to each
individual statute listed in the statutory definition of a ``covered
judicial or administrative action''; this is for ease of reference. The
term ``successful enforcement'' relates to the finality of the
resolution of a covered action or related action. In addition, the
proposed definition of ``covered action'' would provide an explanation
of: whether and when multiple actions may be treated as a single
action; how FinCEN will determine whether the $1,000,000 monetary
sanctions threshold has been
[[Page 16333]]
exceeded; and certain types of actions that FinCEN would not consider
to be covered actions.
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\27\ FinCEN anticipates that Treasury and/or DOJ may bring
actions based on violations of a covered statute whose successful
enforcement results in monetary sanctions in an amount that is equal
to or less than $1,000,000. Such a single action would not qualify
as a ``covered action'' and could not give rise to a claim for an
award. Moreover, as explained below, any judicial or administrative
action brought by the IRS or pursuant to authority delegated to it
in 31 CFR 1010.810(c) and (g) will not be considered a ``covered
action''.
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Whether monetary sanctions resulting from an action exceed
$1,000,000 is relevant to when an action is a ``covered action.'' Only
an action that results in monetary sanctions exceeding $1,000,000 may
be considered a covered action. In turn, the term ``monetary
sanctions'' would be defined in proposed 31 CFR 1010.930(a)(7) to mean
any monies agreed to or ordered to be paid in a covered action or in a
related action, including penalties, fines, settlement payments,
disgorgement, and interest. FinCEN's proposed definition would align
with the statutory definition under 31 U.S.C. 5323(a)(2), but would
also add fines and settlement payments to the listed examples of
monies.
Monetary sanctions do not include blocked property, forfeiture,
restitution, or victim compensation payments. Under the proposed
definition, property or interests in property that are blocked or
frozen would not be considered monetary sanctions because, among other
things, they are not monies agreed to or ordered to be paid.
Furthermore, consistent with 31 U.S.C. 5323(b)(4)(C), FinCEN would
interpret monies collected by the U.S. Victims of State Sponsored
Terrorism Fund (VSSTF)--established pursuant to the Justice for United
States Victims of State Sponsored Terrorism Act--to be victim
compensation payments under the proposed rule and thus excluded from
the definition of monetary sanctions. A final determination about
whether a covered action or related action's proceeds, or a portion of
them, must be deposited into the VSSTF may not occur until after that
covered action or related action is publicly announced. Therefore,
there may be a difference between the monetary sanctions agreed to or
ordered to be paid as disclosed in a press release or other public
disclosure regarding a resolution and the monetary sanctions actually
collected for purposes of calculating the amount of an award owed to a
whistleblower for a covered or related action. Moreover, assessing
whether deposits must be made into the VSSTF must occur prior to any
adjudication of whistleblower awards and may impact the timing of the
publication of a notice of covered action and the timing of the award
adjudication process.\28\ A notice of covered action is described at
proposed 31 CFR 1010.930(d) and discussed in the corresponding section-
by-section analysis.
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\28\ The discussion of FinCEN's process for calculating the
monetary award amount is found in Section III.A.
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Monetary sanctions would include all qualifying monies agreed to or
ordered to be paid by all defendants or respondents, and arising from
all claims that are brought within that action without regard to which
specific defendants or respondents, or which specific claims, were
included in the action as a result of the information that the
whistleblower provided. For example, if FinCEN successfully enforced an
action alleging one BSA violation based on whistleblower information
and a second BSA violation not based on whistleblower information, then
whether the resulting monetary sanctions exceeded $1,000,000 would be
determined based on the combined monetary sanctions from both of the
alleged BSA violations--even though only one of the two violations was
based on whistleblower information. Similarly, if DOJ successfully
enforced an action alleging a BSA count based on whistleblower
information and a bank fraud count under section 1344 of title 18 based
on whistleblower information, then whether the resulting monetary
sanctions exceeded $1,000,000 would be determined based on the combined
monetary sanctions from the two counts--even though only one of the two
counts arises under a covered statute.
This approach would enhance the incentives for individuals to come
forward and report potential violations of the covered statutes and
would avoid the challenges associated with attempting to allocate
monetary sanctions involving multiple individuals and claims based upon
the select individuals and claims reported by whistleblowers.
However, under the definition of ``covered action'' in proposed 31
CFR 1010.930(a)(3)(i), when determining whether the required threshold
for monetary sanctions has been met, FinCEN would not take into account
any monetary sanctions that the whistleblower agreed to or is ordered
to pay. The rationale for this exclusion is to prevent wrongdoers from
financially benefiting from their own misconduct.
Furthermore, under the proposed rule's definition of ``covered
action'' in 31 CFR 1010.930(a)(3)(iii), FinCEN would have the
discretion to treat as a single covered action two or more judicial or
administrative actions that arise out of substantially the same facts
and are successfully enforced at substantially the same time, even if
one or more of the actions do not, on their own, exceed the $1,000,000
monetary threshold, provided that such actions collectively exceed this
threshold. As explained in a preceding paragraph, at least one claim in
each separate action must be an alleged violation of a covered statute.
An implication of this approach would be that FinCEN may aggregate
the monetary sanctions imposed in multiple Treasury or DOJ actions
arising out of a whistleblower's submission. This would include
instances when covered actions may individually result in monetary
sanctions less than $1,000,000 each, but which collectively result in
monetary sanctions exceeding $1,000,000, for purposes of satisfying the
monetary threshold. For example, if a whistleblower's submission leads
to separate enforcement actions by FinCEN, OFAC, and DOJ, each with
total sanctions of $500,000, then FinCEN may aggregate the $500,000
from each of the three separate enforcement actions to meet the
monetary threshold and treat them as one ``covered action'' for the
purpose of making an award. This approach would avoid denying a
whistleblower consideration for an award simply because Treasury and/or
DOJ brought separate actions against parties involved in the same or
closely related conduct.
Moreover, FinCEN would consider that separate judicial or
administrative actions arose out of substantially the same facts when
the separate actions share such a close factual basis that they might
logically have been brought together in one action. In making a
determination that two or more actions arise out of substantially the
same facts, FinCEN would take a number of factors into consideration,
including, but not limited to, whether the separate actions involve the
same or similar: parties (whether named as defendants/respondents or
simply named within the complaint or order); factual allegations;
alleged violations of the covered statutes; or transactions or
occurrences. For example, where a financial institution that pleaded
guilty to criminally violating the AML program requirement of the BSA
and paid a criminal fine in excess of $1,000,000 and that same
financial institution also entered into a Consent Order with FinCEN
imposing a civil money penalty in excess of $1,000,000 to resolve a
parallel civil investigation for willfully violating the relevant
FinCEN's AML program rule requirement, and both cases involved
substantially similar facts giving rise to such AML program violations,
FinCEN may, at its discretion, elect to treat both of those actions as
a single covered action.
[[Page 16334]]
FinCEN would consider that two or more actions were successfully
enforced at substantially the same time if the actions were brought in
or around the same period of time of one another as a result of one or
more parallel investigations by Treasury and/or DOJ. In exercising its
discretion and deciding whether two or more actions were successfully
enforced at substantially the same time, FinCEN intends to apply a
flexible approach. For instance, the proposed definition would not
require that the separate actions be filed, announced, or resolved at
the same time.
Finally, under the proposed definition of ``covered action,'' an
action brought by the IRS or pursuant to authority delegated to it in
31 CFR 1010.810(c) and (g) would not be considered a covered action.
Thus, in addition to IRS actions, certain actions by DOJ would not be
considered covered actions, such as a case brought by DOJ to enforce
BSA provisions regarding records and reports of foreign bank and
financial accounts (FBARs). The IRS has authority to investigate and
enforce FBAR violations pursuant to 31 CFR 1010.810(c)(2) and (g), and
when such cases are referred to DOJ by IRS for prosecution, they would
be excluded from the definition of a covered action. However,
whistleblowers may be eligible for an award for providing information
to the IRS about such violations under the IRS's whistleblower program.
b. ``Related Action'' and Related Terms
The term ``related action'' would be defined in proposed 31 CFR
1010.930(a)(9) to mean any judicial or administrative action brought by
an appropriate agency or authority and successfully enforced that is
based upon the original information provided by a whistleblower
pursuant to this section that led to the successful enforcement of a
covered action. This definition is consistent with the definition of
the same term at 31 U.S.C. 5323(a)(4) except that it uses the phrase
``appropriate agency or authority'' in lieu of the list of governmental
authorities set out in the statute.
Whether an action was brought by an appropriate agency or authority
is relevant to whether an action is a ``related action.'' Thus, for
additional clarity, FinCEN proposes to define the term ``appropriate
agency or authority'' at 31 CFR 1010.930(a)(1) to mean a Federal or
state government agency or other Federal or state entity with legal
authority to bring a judicial or administrative action for
noncompliance with law, including Treasury, DOJ, or any appropriate
Federal authority, a state attorney general in connection with any
criminal investigation, or any appropriate state regulatory authority.
This proposed definition largely tracks the authorities listed at 31
U.S.C. 5323(g)(4)(D)(i)(I)-(III), which is cross-referenced within 31
U.S.C. 5323(a)(4).
The existence of a covered action is a prerequisite to the
existence of a related action. Therefore, a whistleblower may only
receive an award based on the voluntary submission of original
information that led to the successful enforcement of a related action
if that original information also led to the successful enforcement of
a covered action, and the whistleblower otherwise meets all the
criteria set forth in the proposed rule. Although an action brought
under an authority that was delegated to the IRS or another agency by
FinCEN would not be considered a covered action, under the proposed
definition, it may be considered a related action, provided that
Treasury and/or DOJ also brought a covered action. FinCEN is soliciting
comments on whether this prerequisite for a related action is
sufficiently clear in the text of the proposed rule.
c. ``Successful Enforcement'' of a Covered or Related Action
The term ``successful enforcement,'' when used with respect to a
covered action or related action, is defined in proposed 31 CFR
1010.930(a)(10). The term relates to the finality of the resolution of
a covered action or related action, which is important for the
administrability of the Whistleblower Program. FinCEN believes it would
be premature for FinCEN to pay an award based on the judgment in a
covered action or a related action that was later subject to a
successful appeal and reversed or vacated. In addition, doing so could
also damage the integrity and long-term viability of the program.
2. Proposed 31 CFR 1010.930(c)(2)--Voluntariness
Under 31 U.S.C. 5323(b)(1), whistleblowers are eligible for awards
only when they ``voluntarily'' provide original information about
violations of covered statutes or conspiracies to commit such offenses
to Treasury, or DOJ, or their employer. Proposed 31 CFR 1010.930(c)(2)
would define a whistleblower's submission of original information as
``voluntary'' if it is made prior to any request, inquiry, or demand
about a matter related or relevant to the original information in the
whistleblower's submission from Congress, any agency or authority, or a
self-regulatory organization, to the whistleblower or the
whistleblower's attorney or other representative, or in some
circumstances to a whistleblower's employer.
Proposed 31 CFR 1010.930(c)(2) would cover both formal and informal
requests. An example of a formal request would be a subpoena; an
example of an informal request would be a request made by an
appropriate agency or authority to an individual to provide information
where the submission of that information is not legally mandated but at
the individual's own discretion. Under the proposed approach, a
whistleblower's submission would not be considered voluntary, and the
whistleblower would not be eligible for an award, if, before submitting
original information, the whistleblower was contacted by Treasury, DOJ,
or any of the other authorities, about a matter to which the original
information in the whistleblower's submission is relevant, regardless
of whether the whistleblower's response was compelled by subpoena or
other applicable law. FinCEN intends to provide separate public
guidance that explains and provides examples for determining the
voluntariness of a whistleblower's submission of information when a
request, inquiry, or demand is made by any of the aforementioned
authorities to a whistleblower's employer.
3. Proposed 31 CFR 1010.930(c)(3)--Original Source
Proposed 31 CFR 1010.930(c)(3) requires that to be eligible for an
award, a whistleblower must be an ``original source'' of the
information provided. This requirement is derived from the term
``original information,'' which is defined at 31 U.S.C. 5323(a)(3)(A)
and further clarified at proposed 31 CFR 1010.930(a)(8)(i). Proposed 31
CFR 1010.930(c)(3) states that a whistleblower is the ``original
source'' of original information if the original information is derived
from the independent knowledge or independent analysis of that
whistleblower.\29\ The whistleblower would be responsible for
establishing to FinCEN's satisfaction that the whistleblower was the
original source of the original information.
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\29\ The terms ``independent knowledge'' and ``independent
analysis'' are defined in proposed 31 CFR 1010.930(a)(5)-(6).
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4. Proposed 31 CFR 1010.930(c)(4)--Original Information Leading to
Successful Enforcement
Section 5323(b)(1) provides that FinCEN shall pay an award to, or
awards to, one or more whistleblowers
[[Page 16335]]
who voluntarily provided original information to the employer of the
whistleblower(s), Treasury, or DOJ that led to the successful
enforcement of the covered action or related action. Section 5323(f)(1)
further provides that any determination made under section 5323,
``including whether, to whom, or in what amount to make awards,'' shall
be at the discretion of FinCEN. Consistent with these statutory
provisions, proposed 31 CFR 1010.930(c)(4)(i) would provide that FinCEN
will determine whether original information submitted by the
whistleblower led to the successful enforcement of a covered action or
related action. Although FinCEN expects to consult with other relevant
government agencies, as appropriate, the final determination would be
made by FinCEN. In making the determination, FinCEN would use the
criteria set forth in proposed 31 CFR 1010.930(c)(4)(ii), which
describes the circumstances in which original information has led to
the successful enforcement of a covered or related action. These
circumstances, described in the proposed 31 CFR 1010.930(c)(4)(ii),
depend on whether the information provided by a whistleblower concerned
conduct that was previously under investigation or examination.
Specifically, as described in proposed 31 CFR
1010.930(c)(4)(ii)(A), for information regarding conduct not previously
under investigation or examination by an appropriate agency or
authority, FinCEN would consider whether the whistleblower's original
information was sufficiently specific, credible, and timely to cause an
appropriate agency or authority to commence, open, or reopen an
examination or investigation, or inquire concerning different conduct
as part of a current examination or investigation. FinCEN would also
consider whether an appropriate agency or authority successfully
enforced a covered action or related action based in whole or in part
on specific conduct that was the subject of the whistleblower's
original information. However, the proposed standard for whether
original information led to the successful enforcement of a covered
action would be higher for information about conduct already under
investigation or examination than for information regarding conduct not
previously under investigation or examination. As described in proposed
31 CFR 1010.930(c)(4)(ii)(B), FinCEN would consider whether original
information regarding conduct already under investigation or
examination by an appropriate agency or authority significantly
contributed to the successful enforcement of the covered action or
related action.
FinCEN recognizes there may be circumstances where information
received from a whistleblower in relation to an ongoing investigation
is so significant to the successful enforcement of a covered action or
related action that a whistleblower award should be considered. For
example, a whistleblower who had not been questioned or provided
documents in connection with an ongoing investigation may come forward
with evidence that was not previously available to investigators and is
critical to an appropriate agency or authority's ability to satisfy its
burden of proof and therefore enables it to successfully enforce an
action. Under such circumstances, an eligible whistleblower who
otherwise meets the requirements set forth in the proposed rule would
be considered for an award.
Proposed 31 CFR 1010.930(c)(4)(iii) details the conditions under
which FinCEN would consider original information to have been submitted
by the whistleblower. Specifically, FinCEN would consider original
information to have been submitted by the whistleblower when the
whistleblower submitted the original information to FinCEN consistent
with proposed 31 CFR 1010.930(b), which outlines the procedures for
submitting original information. In the case of a whistleblower who
first submits original information to their employer and later reports
that same original information to FinCEN consistent with the
requirements of proposed 31 CFR 1010.930(b), FinCEN will still consider
the original information to have been reported by the whistleblower,
even if the employer provides the whistleblower's original information,
in any form, to Treasury or to DOJ.
5. Proposed 31 CFR 1010.930(c)(5)--Ineligibility
As set forth in proposed 31 CFR 1010.930(c)(5), certain categories
of individuals are ineligible to receive an award under the
Whistleblower Program. The categories of ineligible individuals in
proposed 31 CFR 1010.930(c)(5) include both the categories set forth in
31 U.S.C. 5323(c)(2) and additional categories that FinCEN is proposing
to include. Specifically, proposed 31 CFR 1010.930(c)(5)(i) would
provide that a whistleblower is not eligible for an award based on
certain employment or criminal history.
Under proposed 31 CFR 1010.930(c)(5)(i)(A)(1), a whistleblower is
ineligible for an award if the whistleblower is, or was at the time the
whistleblower acquired the original information, a member, officer,
employee, or contractor of an appropriate regulatory or banking agency,
Treasury, DOJ, a law enforcement agency, Congress (including a
committee of Congress), or a self-regulatory organization, and was
acting in the normal course of their job duties. This provision aligns
with the statute at 31 U.S.C. 5323(c)(2)(A), but would also include
members, officers, employees, or contractors of Congress (including a
committee of Congress) or a self-regulatory organization. The proposed
approach is designed to avoid creating incentives for individuals who
have privileged access to potentially sensitive or valuable information
based on their job positions or oversight roles from abusing their
positions and/or responsibilities for their own personal benefit. In
addition, FinCEN believes that it would be appropriate to exclude an
employee of a self-regulatory organization (SRO) (like the Financial
Industry Regulatory Authority or FINRA, the SRO for the U.S. securities
market, and the National Futures Association or NFA, the SRO for the
U.S. derivatives market) from receiving an award that is based on the
employee's submission of information that employee learned while
working for the SRO, given a SRO's oversight role.
Proposed 31 CFR 1010.930(c)(5)(i)(B), which is consistent with 31
U.S.C. 5323(c)(2)(B), makes ineligible any whistleblower who is
convicted of a criminal violation related to the covered action or
related action for which the whistleblower otherwise could receive an
award.
Proposed 31 CFR 1010.930(c)(5)(ii) provides that certain foreign
officials are ineligible for an award. FinCEN believes that the payment
of awards to foreign officials could have negative repercussions for
U.S. foreign relations, including creating a perception that the United
States is interfering with foreign sovereignty and potentially
undermining foreign government cooperation under existing treaties
(including mutual legal assistance treaties). While not specifically
required by the statute, FinCEN proposes excluding such individuals
from award eligibility to avoid certain potential negative foreign
policy repercussions.
Proposed 31 CFR 1010.930(c)(5)(iii) provides that certain
whistleblowers who obtained information because they meet the criteria
in paragraphs (A) or (B)
[[Page 16336]]
of proposed 31 CFR 1010.930(c)(5)(iii) must wait at least one hundred
and twenty (120) calendar days from when they obtained the information
before providing it to FinCEN to be eligible for an award. The first
category of individuals would be any whistleblower who obtained the
original information because the whistleblower was an officer,
director, trustee, or partner of an entity, or the whistleblower
learned the original information in connection with the entity's
internal processes for identifying, reporting, and addressing possible
violations of law by that entity or a related entity, including but not
limited to a subsidiary or other affiliate under common control. The
second category of individuals would be any whistleblower who obtained
the original information because the whistleblower was an employee
whose principal duties involve audit or compliance responsibilities, or
the whistleblower was employed by, or otherwise associated with, a firm
retained to perform audit or compliance functions for an entity. The
rationale for requiring these categories of individuals to wait before
reporting their original information to FinCEN is to provide entities
that invest in strong internal audit and compliance programs the
opportunity to benefit from such programs. The waiting period provides
these entities the opportunity to review and assess information that
could relate to a violation of a covered statute and, where they deem
it appropriate, address and/or voluntarily disclose the information to
the government. Furthermore, the waiting period is calibrated to help
avoid any incentive for whistleblowers to undermine effective audit or
compliance programs while minimizing any potential harm from delayed
reporting of tips to law enforcement.
Proposed 31 CFR 1010.930(c)(5)(iv) sets forth other bases on which
a whistleblower would be ineligible to receive an award. Proposed 31
CFR 1010.930(c)(5)(iv)(A) provides that a whistleblower is not eligible
to receive an award if the whistleblower obtained original information
through certain means. Specifically, 31 CFR 1010.930(c)(5)(iv)(A)(1)
provides that a whistleblower is ineligible to receive an award if they
obtained original information through a communication that was subject
to attorney-client privilege or work product doctrine, or a similar
legal concept provided for under foreign law, unless the disclosure is
otherwise permitted by the applicable Federal or state law and/or
attorney conduct rules. While this exclusion from eligibility is not
required by the statute, its purpose is to avoid creating an incentive
for attorneys or others to breach attorney-client privilege to seek an
award. FinCEN recognizes that such an incentive could interfere with
the ability of companies and individuals to share information with an
attorney while seeking legal advice.
Other bases for ineligibility are set forth in 31 CFR
1010.930(c)(5)(iv)(A)(2)-(4). In particular, proposed 31 CFR
1010.930(c)(5)(iv)(A)(2) provides that a whistleblower is ineligible to
receive an award if they obtained original information in connection
with the legal representation of a client on whose behalf the
whistleblower or the whistleblower's employer or firm provided
services, and the whistleblower seeks to use the information for their
own benefit, unless the disclosure is otherwise permitted by the
applicable Federal or state law and/or attorney conduct rules.
Furthermore, 31 CFR 1010.930(c)(5)(iv)(A)(3) makes ineligible
whistleblowers who obtained original information by a means or in a
manner that is determined by a United States court to violate
applicable Federal or state criminal law. Finally, to prevent evasion
of the aforementioned ineligibility rules, proposed 31 CFR
1010.930(c)(5)(iv)(A)(4) provides that an individual who acquires
information from another individual who is ineligible pursuant to
proposed 31 CFR 1010.930(c)(5)(iv)(A)(1) through (3) is similarly
ineligible for an award.
Additionally, proposed 31 CFR 1010.930(c)(5)(iv)(B) would render a
whistleblower ineligible for an award if, in the whistleblower's
submission, other dealings with Treasury or with DOJ, or dealings with
another appropriate agency or authority in connection with a related
action, the whistleblower: knowingly and willfully makes any false,
fictitious, fraudulent, or misleading statement or representation; uses
any false writing or document, knowing the writing or document contains
any false, fictitious, fraudulent, or misleading statement or entry; or
knowingly and willfully omits any fact, the omission of which causes
other statements or representations made by the whistleblower to be
misleading. The first and second criteria mirror statutory provisions
at 31 U.S.C. 5323(h). Consistent with the express statutory obligation
to exclude whistleblowers under the first and second criteria, FinCEN
proposes including the third criterion to prohibit conduct similar in
nature to the conduct prohibited by the first and second criteria. The
proposed approach is important to incentivize whistleblowers to provide
valuable information that contributes significantly to the U.S.
government's enforcement efforts. Furthermore, the receipt of false or
misleading information would compromise the integrity of the
Whistleblower Program and waste the U.S. government's time and
resources.
Determinations about whether a whistleblower is eligible to receive
an award, or is ineligible to receive an award, would be at FinCEN's
discretion. FinCEN notes that a determination that a whistleblower is
ineligible to receive an award for any reason would not deprive the
individual of the anti-retaliation protections set forth in 31 U.S.C.
5323(g)(1), which are discussed further in the section-by-section
analysis for proposed 31 CFR 1010.930(f).
7. Proposed 31 CFR 1010.930(c)(6)--Permanent Bar
Where an individual repeatedly makes frivolous or fraudulent
submissions or otherwise hinders the effective and efficient operation
of the Whistleblower Program, proposed 31 CFR 1010.930(c)(6) provides
that FinCEN may permanently bar that individual from the Whistleblower
Program. Under the proposed approach, FinCEN may also permanently bar
any attorney representing such individual. FinCEN notes that this
proposed regulation is designed to protect the integrity of the
Whistleblower Program and to ensure that Treasury and DOJ do not waste
critical resources investigating false or misleading leads received
through the Whistleblower Program. It is not, however, intended to
exclude individuals who make a good faith effort to provide valuable
information but, for instance, make technical errors when submitting
such information.
Under proposed 31 CFR 1010.930(c)(6)(i), there are three instances
where FinCEN would be able to permanently bar an individual from the
Whistleblower Program.
First, an individual could be barred if the individual makes, or
causes to be made, at least three award applications that FinCEN finds
to be frivolous, fraudulent, dishonest, abusive, or lacking a colorable
connection between the information submitted to FinCEN and the covered
action or related action for which the individual is seeking an award.
Second, an individual could be barred if the individual makes, or
causes to be made, at least three submissions of information that
FinCEN finds to be frivolous, fraudulent, dishonest, or abusive.
[[Page 16337]]
Third, an individual could be barred if, in FinCEN's judgment, the
individual directly or indirectly in connection with any submission of
information or application made pursuant to the Whistleblower Program
or with respect to any covered action or related action, to have misled
or otherwise hindered any appropriate agency or authority, SRO, member
of Congress, or committee of Congress by: knowingly and willfully
making any materially false, fictitious, fraudulent, or misleading
statement or representation; using any false writing or document,
knowing that the writing or document contains any false, fictitious,
fraudulent, or misleading statement or entry; or knowingly and
willfully omitting any fact, the omission of which causes other
statements or representations made by the whistleblower to be
misleading.
Under the proposed approach, FinCEN would retain the ability to
decide whether any individual should be permanently barred from the
Whistleblower Program for any of these three reasons.
Additionally, proposed 31 CFR 1010.930(c)(6)(ii) provides that,
before issuing a permanent bar, FinCEN would be required to notify the
individual to be permanently barred and afford the individual 30
calendar days to respond in writing. FinCEN would be required to notify
the individual of its final determination after the response period
ends. The consequences of a permanent bar are described in proposed 31
CFR 1010.930(c)(6)(iii). Under the proposed approach, an individual who
has been permanently barred would not be eligible to receive an award,
and an attorney who has been permanently barred also would not be
permitted to represent any other individual in connection with the
Whistleblower Program.\30\
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\30\ For example, an attorney may be permanently barred from
representing any other individual in connection with the
Whistleblower Program if the attorney thrice signs the counsel
certification form and submits a Form TCR that FinCEN later
determined contains fraudulent information. In such an example, the
attorney would have caused to be made three submissions of
information that FinCEN found to be fraudulent.
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D. Proposed 31 CFR 1010.930(d)--Submission of an Award Application
Proposed 31 CFR 1010.930(d) describes the procedures a
whistleblower must follow when applying for an award, including the
timing and form of the submission. The proposed regulation also sets
out the procedures that a whistleblower must follow if they submitted
original information anonymously and provides that a whistleblower may
submit a request to withdraw an award application.
1. Proposed 31 CFR 1010.930(d)(1)--Timing
The award application process would begin with the publication of a
notice of a covered action on a Treasury website. Such notices would
include covered actions brought by Treasury and, when DOJ provides such
information to FinCEN, covered actions brought by DOJ. Whether a
judicial or administrative action is a covered action, and thus whether
a notice of a covered action should be published, shall be at FinCEN's
discretion. Proposed 31 CFR 1010.930(d)(1) would provide that a
whistleblower must submit an application for an award based on a
covered action to FinCEN no later than ninety (90) calendar days after
the relevant notice of covered action was first published. With respect
to related actions, the proposed rule would provide that a
whistleblower must submit an application for an award based on a
related action no later than one hundred and eighty (180) calendar days
after either: (i) the date on which the relevant notice of covered
action was first published on a Treasury website; or (ii) the
successful enforcement of that related action. FinCEN expects a
whistleblower would be able to apply for an award based on both a
covered action and a related action in the same application.\31\
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\31\ As a practical matter, the deadline to apply for an award
based on a covered action is the same regardless of whether and when
a related action is successfully enforced. Proposed 31 CFR
1010.930(d)(1) provides a whistleblower must submit an application
for an award based on a covered action to FinCEN no later than
ninety (90) calendar days after a relevant notice of covered action
was first published.
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Under the proposed approach, whistleblowers would bear complete
responsibility for monitoring for whether and when a relevant notice of
covered action has been published. Accordingly, Treasury and DOJ are
not required to contact whistleblowers directly to alert them to the
publication of notices of covered actions. Whistleblowers would also
bear complete responsibility for tracking related actions, including
whether such actions have been successfully enforced. As with covered
actions, Treasury and DOJ would not be required to contact
whistleblowers directly to alert them to whether and when a related
action was successfully enforced.
Finally, FinCEN notes that, with respect to any award applications
that were submitted prior to the effective date of a rule implementing
this Whistleblower Program, should the proposed rule be finalized,
whistleblowers would be required to resubmit any such award
applications to FinCEN after the effective date of the final rule. In
submitting their award application, whistleblowers would be required to
use the award application form that FinCEN is proposing as part of this
rulemaking, namely the ``Application for Award for Original Information
Submitted Pursuant to 31 U.S.C. 5323'' (``Form WB-APP'') or a successor
form, and otherwise comply with the requirements set out in the rule.
2. Proposed 31 CFR 1010.930(d)(2)--Form
Proposed 31 CFR 1010.930(d)(2) requires each application for an
award be submitted using the Form WB-APP or a successor form. The Form
WB-APP would be submitted through a secure online portal or in another
manner expressly authorized by FinCEN. The purpose of limiting the
manner in which whistleblowers may submit an award application would be
to ensure that every whistleblower's submission is received, reviewed,
and tracked by FinCEN's Office of the Whistleblower, which is
responsible for adjudicating awards. If, in the future, FinCEN issues a
successor form to the Form WB-APP, it will provide notice and make the
form publicly available, consistent with its obligations under the
Paperwork Reduction Act. As with the Form TCR, each whistleblower and,
if applicable, their attorney, would be required to certify the
information contained in the Form WB-APP is true, correct, and complete
to the best of their knowledge.
3. Proposed 31 CFR 1010.930(d)(3)--Award Application Based on Anonymous
Submission of Original Information
Proposed 31 CFR 1010.930(d)(3) describes award application
procedures for a whistleblower who submitted original information to
FinCEN anonymously. Whistleblowers who first submitted original
information anonymously may then submit an award application that
discloses their identity. Such whistleblowers would be required to
confirm their identity as the source of the original information
previously submitted to FinCEN. However, whistleblowers who submitted
original information anonymously and who also submit an award
application on an anonymous basis must be represented by an attorney.
In such a case, the whistleblower's attorney would submit
[[Page 16338]]
to FinCEN a completed Form WB-APP (or successor form) that would not
disclose the whistleblower's identity and would be signed solely by the
whistleblower's attorney. Separately, the anonymous whistleblower would
be required to provide their attorney with a completed Form WB-APP
signed by the whistleblower under penalty of perjury. The form signed
by the anonymous whistleblower would be required to be provided to the
whistleblower's attorney before the attorney submits a completed Form
WB-APP to FinCEN on the whistleblower's behalf. The original form
signed by the anonymous whistleblower would be required to be retained
by the attorney and would not be submitted to FinCEN immediately. The
whistleblower's attorney would be required to certify they have
verified the identity of the whistleblower on whose behalf the form is
being submitted by viewing the whistleblower's valid, unexpired
government-issued identification (e.g., driver's license, passport).
Consistent with 31 U.S.C. 5323(d)(2)(B), proposed 31 CFR
1010.930(d)(3)(ii)(C) would state that, upon FinCEN's request and prior
to the payment of any award, the whistleblower's attorney would be
required to disclose the identity of the whistleblower to FinCEN by
providing the whistleblower's signed original form, and the
whistleblower's identity would be required to be verified in a form and
manner that is acceptable to FinCEN.
4. Proposed 31 CFR 1010.930(d)(4)--Withdrawal
Proposed 31 CFR 1010.930(d)(4) permits the whistleblower to
withdraw a Form WB-APP by submitting a written request to FinCEN at any
time after the Form WB-APP is submitted.
E. Proposed 31 CFR 1010.930(e)--Award Adjudication
Proposed 31 CFR 1010.930(e) explains the award adjudication
process, including that FinCEN would determine whether a whistleblower
is eligible to receive an award and FinCEN's process for determining
the amount of an award. The proposed regulation also describes the
process and timing with respect to the disposition of award
applications and includes a requirement that each whistleblower enter
into certain agreements prior to the issuance or payment of an award.
Finally, the proposed regulation provides that all payments of an award
are subject to the availability of funds and also provides clarity
around entitlement to and timing of payments.
1. Proposed 31 CFR 1010.930(e)(1)--Eligible Whistleblower
Proposed 31 CFR 1010.930(e)(1) explains that, after receipt of a
Form WB-APP or a successor form, FinCEN would determine pursuant to
proposed 31 CFR 1010.930(c) whether the whistleblower is eligible to
receive an award. As discussed above in section III.C. of this notice,
proposed 31 CFR 1010.930(c) sets out the factors for whistleblower
eligibility, which includes, among other things, that the
whistleblower's original information led to the successful enforcement
of a covered action or related action. Decisions regarding the
investigation or prosecution of allegations made by whistleblowers in
their submissions of original information are at the discretion of
Treasury or DOJ.
2. Proposed 31 CFR 1010.930(e)(2)--Agreements
Proposed 31 CFR 1010.930(e)(2) requires each whistleblower to enter
into any confidentiality agreement and, in appropriate circumstances,
any advance or amortizing payment agreement, requested by and in a form
acceptable to FinCEN prior to any issuance or payment of an award.
3. Proposed 31 CFR 1010.930(e)(3)(i)-(iii)--Amount of Award
Consistent with 31 U.S.C. 5323(b)(1), the proposed rule provides
for the payment of an award within the statutorily mandated range (10
to 30 percent, in total, of monetary sanctions collected in covered
actions or related actions). As provided in 31 U.S.C. 5323(c)(1)(A) and
(f)(1), FinCEN has discretion to determine the amount of an award.
Accordingly, proposed 31 CFR 1010.930(e)(3) outlines how FinCEN would
proceed in determining the amount. Furthermore, consistent with 31
U.S.C. 5323(b)(3)(A), the award would be paid from the Financial
Integrity Fund, subject to the amount available in the fund.
As required by 31 U.S.C. 5323(b)(1), proposed 31 CFR
1010.930(e)(3)(i) provides that FinCEN will make an award to an
eligible whistleblower for submission of original information that has
led to the successful enforcement of a covered action or related action
of, in the aggregate, not less than 10 percent and not more than 30
percent of the collected monetary sanctions imposed in the covered
action or related actions. To determine the amount of monetary
sanctions ``collected,'' FinCEN would utilize the definition of the
term ``collected'' proposed at 31 CFR 1010.930(a)(2). Accordingly,
FinCEN would considered monetary sanctions to be collected when monies
have been deposited and credited in satisfaction of any order,
agreement, or settlement and: (i) in the case of a covered action,
Treasury's confirmation that such deposit and credit have been
processed, or (ii) in the case of a related action, FinCEN's receipt of
confirmation from the appropriate agency or authority that such deposit
and credit have been processed. Furthermore, at FinCEN's discretion and
pursuant to an advance or amortizing payment agreement described in
section 1010.930(e)(2), monetary sanctions may be considered collected
when monies are reasonably expected to be deposited and credited in
satisfaction of any order, agreement, or settlement in a covered action
or related action. FinCEN's proposal reflects the fact that Treasury,
DOJ, or certain appropriate agencies or authorities may allow a party
to pay monetary sanctions in installments, and receipt of the full
amount of monetary sanctions a party is obligated to pay may not occur
immediately after resolution of the covered action or related
action.\32\ Thus, in certain appropriate circumstances and at FinCEN's
discretion, the proposed regulation would allow for an award to be made
on the basis of an amount received in partial satisfaction of an
agreement or order to pay. Additionally, the proposed rule would state
that, when determining the collected monetary sanctions on which the
award amount range will be based, FinCEN would not include amounts paid
by a whistleblower or paid by an entity the liability of which is
determined by Treasury or DOJ to be based substantially on conduct that
the whistleblower directed, planned, initiated, or controlled. The
rationale for excluding these payments is to prevent wrongdoers from
financially benefiting from their own misconduct.
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\32\ In addition, where a party resolves a matter with multiple
government agencies in parallel, the total amount of the penalty
imposed may be different than the amount that is ultimately
collected in the event one or more government agencies were to
credit against the payments owed to them any payments made to the
other government agencies. For example, in a case where FinCEN and
DOJ respectively imposed $100 million and $50 million monetary
penalties, if FinCEN agreed to credit the $50 million paid to DOJ
against the $100 million owed to FinCEN, then the total amount
collected would be only $100 million, not $150 million.
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Proposed 31 CFR 1010.930(e)(3)(ii) explains how the 10 to 30
percent range for the award amount would apply when there are multiple
whistleblowers. Under the proposed rule, if FinCEN makes awards to more
than one whistleblower in connection with the
[[Page 16339]]
same covered action or related action, FinCEN would make separate
awards for each whistleblower and would have discretion to determine
the appropriate award percentage for each whistleblower. Consistent
with the statute, however, the total amount awarded to all
whistleblowers in the aggregate would not be less than 10 percent or
greater than 30 percent of the collected monetary sanctions imposed.
Proposed 31 CFR 1010.930(e)(3)(iii) describes the factors that, in
addition to proposed 31 CFR 1010.930(e)(3)(i) and (ii), FinCEN shall
consider when determining the specific amount of an award. Proposed 31
CFR 1010.930(e)(3)(iii)(A) through (C) are consistent with the three
criteria set forth in the statute; proposed 31 CFR
1010.930(e)(3)(iii)(D) through (G) would be four additional criteria
that FinCEN is proposing to add, pursuant to the statute and in
consultation with the Attorney General, which provides authority to
consider ``additional relevant factors'' established by rule or
regulation when determining the amount of an award.\33\
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\33\ 31 U.S.C. 5323(c)(1)(B)(iv).
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Under proposed 31 CFR 1010.930(e)(3)(iii)(A), FinCEN would consider
the significance of the information provided by the whistleblower to
the success of the covered action or related action(s) and, under
proposed 31 CFR 1010.930(e)(3)(iii)(B), FinCEN would consider the
degree of assistance provided by the whistleblower and any legal
representative of the whistleblower in the covered action or related
action(s), including by providing additional information in connection
with the investigations that led to the covered action or related
action. In addition, under proposed 31 CFR 1010.930(e)(3)(iii)(C),
FinCEN would consider the programmatic interest of Treasury or DOJ in
deterring violations of the covered statutes (namely the BSA, Kingpin
Act, IEEPA, and TWEA) by making awards to whistleblowers. FinCEN would
apply these statutory criteria when determining whether to make an
award on the basis of either a covered action or related action.
In addition to the three factors that FinCEN is statutorily
required to consider, FinCEN proposes four additional factors that it
will consider when determining the amount of an award. Specifically,
proposed 31 CFR 1010.930(e)(3)(iii)(D) provides that, where applicable,
FinCEN shall take into consideration the culpability or involvement of
the whistleblower in matters associated with the covered action or
related action(s). Proposed 31 CFR 1010.930(e)(3)(iii)(E) provides
that, where applicable, FinCEN may consider whether the whistleblower
unreasonably delayed reporting the violations. Proposed 31 CFR
1010.930(e)(3)(iii)(F) provides that, where applicable, FinCEN may
consider the whistleblower's role with respect to an entity's internal
compliance or reporting systems. Finally, proposed 31 CFR
1010.930(e)(3)(iii)(G) provides that, where applicable, FinCEN may
consider the lawful considerations and conclusions of an appropriate
agency or authority, or a self-regulatory organization relating to the
whistleblower and the covered action. FinCEN anticipates that, before
it makes a final determination with respect to proposed 31 CFR
1010.930(e)(3)(iii)(G), FinCEN would consult the appropriate agency or
authority or self-regulatory organization, as appropriate. However, any
final decisions about whether and how to weigh this factor would be
made by FinCEN at its discretion.
FinCEN anticipates that the determination of awards amounts
pursuant to proposed 31 CFR 1010.930(e)(3)(iii)(A) through (G) would
involve the review of the specific circumstances surrounding each
award. To permit case-specific review and award determinations, the
proposed criteria would give FinCEN broad discretion when determining
the amount of any particular award. Depending upon the facts and
circumstances of each case, some criteria may not be applicable or may
deserve greater weight than others.
4. Proposed 31 CFR 1010.930(e)(3)(iv)--Certain Awards of $15 Million or
Less
Proposed 31 CFR 1010.930(e)(3)(iv) establishes that, when 30
percent of the monetary sanctions collected in any covered action or
related action(s), in aggregate, is $15 million or less, there is a
presumption the award payment to the whistleblower (or to two or more
whistleblowers together) will be the maximum allowed: 30 percent.\34\
If FinCEN determines that proposed 31 CFR 1010.930(e)(3)(iv) applies,
then FinCEN need not consider the criteria set forth in proposed 31 CFR
1010.930(e)(3)(iii)(D) through (G) when determining the amount to
award. FinCEN believes this maximum award presumption would further
incentivize whistleblowers to come forward with information across a
range of actions, including those that concern relatively smaller
dollar amounts. Furthermore, FinCEN believes that applying it would
result in meaningful efficiencies by reducing the time and resources
necessary for FinCEN to adjudicate lower dollar award applications.
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\34\ For example, if a whistleblower's voluntary submission of
original information led to the successful enforcement of a covered
action by FinCEN in which FinCEN imposed and collected $50 million
in monetary sanctions, then the rule would apply because 30 percent
of the monetary sanctions collected would be $15 million. Similarly,
if a whistleblower's voluntary submission of original information
led to the successful enforcement of a covered action by FinCEN and
a related action by a state attorney general, in each of which the
enforcing agency imposed and collected $15 million in monetary
sanctions, then the rule would apply because 30 percent of the
monetary sanctions collected, in aggregate, would be $9 million.
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However, the proposed rule provides that FinCEN may consider
certain negative factors that may lead FinCEN to determine that the
maximum award presumption should not be applied. For example, if FinCEN
was aware that a whistleblower undermined the relevant company's
internal compliance or reporting functions, then FinCEN may decide that
the presumption should not be applied. The proposed rule also provides
that an otherwise eligible whistleblower would not receive the maximum
award pursuant to proposed 31 CFR 1010.930(e)(3)(iv) if FinCEN
determines, at its discretion, that paying the whistleblower the
maximum amount would undermine the integrity or objectives of the
Whistleblower Program. This exception would preserve FinCEN's
discretion where relevant circumstances counsel against awarding a
whistleblower the statutory maximum. For example, one objective of the
Whistleblower Program is to enhance Treasury and DOJ's efforts to
enforce national security laws, including sanctions issued under IEEPA.
If the whistleblower participated in a conspiracy to violate sanctions
that was unrelated to the conduct that formed the basis of the covered
action, then FinCEN could determine not to award the maximum amount to
the whistleblower. FinCEN expects to invoke this exception rarely and,
likely, in instances involving egregious facts.
5. Proposed 31 CFR 1010.930(e)(3)(v)--Actions Subject to Multiple
Awards Programs
Proposed 31 CFR 1010.930(e)(3)(v) addresses potential additional
considerations that may be relevant in connection with actions subject
to multiple awards programs. The proposed regulation would provide that
if FinCEN determines that another whistleblower program established by
the Federal government or a state government has paid or will pay the
whistleblower in connection with the same related action for which the
[[Page 16340]]
whistleblower is applying for an award, then FinCEN may consult with
the other relevant Federal government or state government agencies and,
if ascertainable, may consider several factors. Specifically, FinCEN
would consider: the nature, scope, and impact of the misconduct charged
in the related action, and its relationship to the enforcement of a
covered statute or the relevant covered action; the degree to which the
monetary sanctions imposed in the related action arise out of the
conduct that was the subject of the covered action; the existence and
substance of agreements or other understandings between Treasury or DOJ
and the other Federal government or state government agencies; and
whether the whistleblower is eligible for an award from the other award
program and whether the administrators of the other award program have
paid or are likely to pay an award in an amount FinCEN deems
reasonable, using the factors in proposed 31 CFR 1010.930(e)(3)(iii)
and (iv) or adopting the analysis of the other agency, to the
whistleblower for the related action. Under this proposed approach, in
light of this consultation and consideration, FinCEN may determine to
award less than 10 percent of the collected monetary sanctions imposed
in a related action where the total amount that has been or may be paid
to the whistleblower by FinCEN and the separate whistleblower monetary
award program(s) would not be less than 10 percent of the collected
monetary sanctions imposed in the related action.
6. Proposed 31 CFR 1010.930(e)(3)(vi)--Related Action Awards
Proposed 31 CFR 1010.930(e)(3)(vi) clarifies that FinCEN would only
make an award to a whistleblower based on a related action when it has
sufficient information from which to determine that all the elements of
a related action have been satisfied. Specifically, before making such
an award, FinCEN must have sufficient information from which it can
conclude that a judicial or administrative action brought by an
appropriate agency or authority was, in fact, based upon the original
information provided by a particular whistleblower and that the
information provided by the whistleblower also led to the successful
enforcement of a particular covered action. Although FinCEN expects
that most appropriate agencies or authorities would provide information
to FinCEN that would allow it to determine whether an action met the
aforementioned criteria of a related action, there might be situations
in which agencies are unable to share this kind of information (for
instance, where disclosure of the information by the appropriate agency
or authority is prohibited by 26 U.S.C. 6103). In such a situation,
FinCEN would only make an award if the whistleblower provided
sufficient information from which FinCEN could conclude that the
criteria for a related action had been met.
7. Proposed 31 CFR 1010.930(e)(4)--Disposition of Applications
Proposed 31 CFR 1010.930(e)(4) describes the process and timing
with respect to the disposition of applications. Specifically, proposed
31 CFR 1010.930(e)(4)(i) provides that FinCEN would inform
whistleblowers in writing of the preliminary determinations of their
applications. A preliminary determination of an application would be
sent electronically, by mail, or both, to the whistleblower or the
whistleblower's attorney before the delivery of a final determination.
The whistleblower would then be afforded at least 30 calendar days to
respond to a preliminary determination. Proposed 31 CFR
1010.930(e)(4)(ii) provides that a final determination of an
application would be delivered electronically, by mail, or both, to the
whistleblower or the whistleblower's attorney. To further transparency,
proposed 31 CFR 1010.930(e)(4)(iii) states that FinCEN would
periodically publish its final determinations of awards, related press
releases, and other summaries in a manner consistent with the
confidentiality requirements set forth in section 5323(g)(4) and
proposed 31 CFR 1010.930(f).
8. Proposed 31 CFR 1010.930(e)(5)--Availability of Funds
Proposed 31 CFR 1010.930(e)(5) clarifies that any payment of an
award issued to whistleblowers by FinCEN is subject to amounts being
available in the fund described in 31 U.S.C. 5323(b). If there are
insufficient amounts available in the fund to pay an award to a
whistleblower or whistleblowers when a payment should otherwise be
made, then the whistleblower or whistleblowers will be paid when
amounts become available in the fund. FinCEN would determine, at its
discretion, how to prioritize outstanding payments, if any.
9. Proposed 31 CFR 1010.930(e)(6)--Entitlement to Payment
Proposed 31 CFR 1010.930(e)(6) provides clarification that a
recipient of a whistleblower award is entitled to payment on the award
only to the extent that a monetary sanction is collected in the covered
action or in a related action upon which the award is based. Consistent
with the definition of ``collected'' set out in proposed 31 CFR
1010.930(a)(2) and as explained in the context of determining the
amount of an award under proposed 31 CFR 1010.930(e)(3)(i), monetary
sanctions are generally considered to be collected when the monies have
been deposited, credited, and confirmed by the relevant government
agency or authority. However, consistent with 31 CFR 1010.930(a)(2),
FinCEN may also, at its discretion and in connection with an advance or
amortizing payment agreement, consider monetary sanctions to be
collected when monies are reasonably expected to be deposited and
credited in satisfaction of any order, agreement, or settlement in a
covered action or related action.
Based on its experience with prior enforcement actions, FinCEN
anticipates that there may be instances in which the subject of a
covered action will make payments in satisfaction of the monetary
sanctions owed over a defined period of time. In such circumstances,
FinCEN may elect to consider, among other things, the amount of
monetary sanctions that the subject has paid to date, the amount FinCEN
reasonably expects the subject to pay, and the balance of the Financial
Integrity Fund. Such an approach would be an alternative to waiting
until full receipt of the final payment in the defined period of time,
which could delay payments to eligible whistleblowers. In such
situations, FinCEN expects to enter into an agreement with the
whistleblower to specify the terms of payment, as described in proposed
31 CFR 1010.930(e)(2), before issuing an award.
10. Proposed 31 CFR 1010.930(e)(7)--Timing of Payment
Proposed 31 CFR 1010.930(e)(7) addresses the timing for when FinCEN
will pay a whistleblower award. Specifically, payment of a
whistleblower award for a monetary sanction collected in a covered
action or related action shall be made following the later of: the date
on which the monetary sanction is collected; or the completion of the
appeals process set forth in 1010.930(g) for all whistleblower award
claims arising from the notice of covered action, in the case of any
payment of an award for a monetary sanction collected in a covered
action, or the related action, in the case of any payment of an award
for a monetary sanction collected in a related action.
[[Page 16341]]
F. Proposed 31 CFR 1010.930(f)--Confidentiality and Protections
FinCEN recognizes that preserving confidentiality and protecting
whistleblowers against retaliation may be as important as financial
incentives in encouraging potential whistleblowers to come forward with
information. Proposed 31 CFR 1010.930(f) describes FinCEN's proposed
approach toward protecting whistleblowers who take any lawful actions
described in 31 U.S.C. 5323(g)(1).
1. Proposed 31 CFR 1010.930(f)(1)--Sharing Original Information With
Government Agencies
Consistent with 31 U.S.C. 5323, which creates an incentive for
whistleblowers to submit information for use by Treasury and DOJ,
proposed 31 CFR 1010.930(f)(1) confirms that FinCEN would make the
information submitted by whistleblowers to FinCEN available to Treasury
and DOJ. FinCEN may also, at FinCEN's discretion, make original
information available to other appropriate agencies and authorities
and/or to foreign law enforcement authorities.
2. Proposed 31 CFR 1010.930(f)(2)--Confidentiality
Proposed 31 CFR 1010.930(f)(2) reflects the confidentiality
requirements set forth in 31 U.S.C. 5323(g)(4) with respect to
information that could reasonably be expected to reveal the identity of
a whistleblower. Consistent with 31 U.S.C. 5323(g)(4), the proposed
rule requires that FinCEN not disclose any information, including
information provided by a whistleblower to FinCEN, which could
reasonably be expected to reveal the identity of a whistleblower,
except in circumstances described in the statute and the rule.
In line with 31 U.S.C. 5323(g)(4)(A), proposed 31 CFR
1010.930(f)(2)(i)(A) expressly authorizes disclosure of information
that could reasonably be expected to reveal the identity of a
whistleblower when disclosure is required to a defendant or respondent
in connection with a public proceeding instituted by any appropriate
agency or authority or a foreign law enforcement authority. For
example, in a covered action brought as a criminal prosecution by DOJ,
disclosure of a whistleblower's identity may be required, in light of
the requirement of the Sixth Amendment of the Constitution that a
criminal defendant have the right to be confronted with witnesses
against him.\35\ Such disclosure also may be required to fulfill the
government's discovery obligations, which are generally established by
Federal Rules of Criminal Procedure 16 and 26.2, 18 U.S.C. 3500 (the
Jencks Act), Brady v. Maryland, 373 U.S. 83 (1963), and Giglio v.
United States, 405 U.S. 150 (1972).
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\35\ See U.S. Const. amend. VI.
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Proposed 31 CFR 1010.930(f)(2)(i)(B), in turn, would authorize
disclosure to any appropriate agency or authority, or a foreign law
enforcement authority, when FinCEN determines that it is necessary to
accomplish the purposes of the covered statutes, including to safeguard
the financial system from illicit use, combat money laundering and
related criminal activity, and promote national security. Also, in line
with 31 U.S.C. 5323(g)(4)(A), proposed 31 CFR 1010.930(f)(2)(i)(C)
authorizes disclosure in accordance with the Privacy Act of 1974 (5
U.S.C. 552a). Finally, proposed 31 CFR 1010.930(f)(2)(i)(D) also
clarifies that FinCEN is authorized to disclose information that could
reasonably be expected to reveal the identity of a whistleblower with
the consent of the whistleblower to whom the information pertains.\36\
For example, in cases where there are multiple whistleblowers,
disclosure could enable, among other things, consenting whistleblowers
to negotiate with the other whistleblowers as to how any award could be
allocated amongst them.
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\36\ A disclosure with the consent of the individual is also in
accordance with the Privacy Act. See generally 5 U.S.C. 552a(b).
``No agency shall disclose any record which is contained in a system
of records by any means of communication to any person, or to
another agency, except pursuant to a written request by, or with the
prior written consent of, the individual to whom the record pertains
[subject to 12 exceptions].'' Id.
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Consistent with 31 U.S.C. 5323(g)(4)(C), proposed 31 CFR
1010.930(f)(2)(ii) states that nothing this section shall be construed
to limit the ability of DOJ, at its discretion, to present any
information--including information provided by a whistleblower to
FinCEN, which could reasonably be expected to reveal the identity of a
whistleblower--to a grand jury or to limit the ability of Treasury,
DOJ, or any appropriate agency or authority to share evidence with
potential witnesses or defendants in the course of an ongoing civil or
criminal investigation. Disclosures such as these are sometimes
necessary for DOJ to progress an investigation and charge crimes based
on the information DOJ receives from whistleblowers, among other
evidence. Such disclosures are therefore also necessary for
whistleblower information to aid DOJ in the civil and criminal
enforcement of the covered statutes.
3. Proposed 31 CFR 1010.930(f)(3)--Prohibition Against Retaliation
Proposed 31 CFR 1010.930(f)(3) reflects the provisions set forth in
31 U.S.C. 5323(g)(1), which prohibit an employer from retaliating
against a whistleblower.\37\ Furthermore, any whistleblower who alleges
discharge or other discrimination, or is otherwise aggrieved by an
employer, in violation of 31 U.S.C. 5323(g)(1), may seek relief under
31 U.S.C. 5323(g)(2), by filing a complaint with the Department of
Labor and, in certain circumstances, bring an action against the
employer in the appropriate district court of the United States. For
purposes of the anti-retaliation prohibition in 31 U.S.C. 5323(g)(1),
the term ``whistleblower'' is defined more broadly to include any
individual who takes, or two or more individuals acting jointly who
take, any actions described in 31 U.S.C. 5323(g)(1)(A)-(C). The actions
described in the statute include, among other things, providing certain
information to Congress, as well as testifying in or assisting in
certain Treasury or DOJ actions or investigations. Whistleblowers may
refer to <a href="http://www.Whistleblowers.gov">www.Whistleblowers.gov</a> for more information about the
Department of Labor's whistleblower protection program, as well as the
regulations implementing the anti-retaliation provisions at 29 CFR
1992.101-1992.115.\38\ In addition, FinCEN may enforce 31 U.S.C.
5323(g)(1) using mechanisms within the scope of its authority,
including under 31 U.S.C. 5321.
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\37\ This provision does not apply to any employer that is
subject to section 33 of the Federal Deposit Insurance Act (12
U.S.C. 1831j) or section 213 or 214 of the Federal Credit Union Act
(12 U.S.C. 1790b, 1790c). See 31 U.S.C. 5323(g)(6).
\38\ Department of Labor, Occupational Safety and Health
Administration, Procedures for the Handling of Retaliation
Complaints Under the Anti-Money Laundering Act of 2020 (AMLA), 90 FR
3021 (Jan. 14, 2025), <a href="https://www.federalregister.gov/documents/2025/01/14/2025-00539/procedures-for-the-handling-of-retaliation-complaints-under-the-anti-money-laundering-act-of-2020">https://www.federalregister.gov/documents/2025/01/14/2025-00539/procedures-for-the-handling-of-retaliation-complaints-under-the-anti-money-laundering-act-of-2020</a>. The
Department of Labor's interim final rule for handling retaliation
complaints made in connection with the Whistleblower Program became
effective on January 14, 2025.
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4. Proposed 31 CFR 1010.930(f)(4)--Communications With Individuals
Reporting Possible Violations
Proposed 31 CFR 1010.930(f)(4) provides notice that no person may
take any action to impede an individual from communicating directly
with Treasury or DOJ about any possible violations of the covered
statutes or any potential
[[Page 16342]]
conspiracies to commit any such offenses. This includes, but is not
limited to, employers who knowingly and by any means discourage,
hinder, or delay a whistleblower from communicating directly with
Treasury or DOJ. The Whistleblower Program encourages whistleblowers to
report violations of the covered statutes by providing incentives and
protections. Efforts to impede a whistleblower's direct communications
with Treasury or DOJ about a potential violation of a covered statute,
however, would appear to undermine such incentives. The proposed rule
would not, however, address the effectiveness or enforceability of
confidentiality agreements in situations other than communications with
Treasury or DOJ about any possible violations of the covered statutes
or any potential conspiracies to commit any such offenses.
5. Proposed 31 CFR 1010.930(f)(5)--Non-Waiver
Consistent with 31 U.S.C. 5323(j)(1), proposed 31 CFR
1010.930(f)(5) would confirm that the rights and remedies provided for
in section 5323 may not be waived by any agreement, policy, form, or
condition of employment, including by a predispute arbitration
agreement. Under the proposed regulation, which is consistent with the
statute, no predispute arbitration agreement shall be valid or
enforceable if the agreement requires arbitration of a dispute.
G. Proposed 31 CFR 1010.930(g)--Appeals
Section 5323(f) provides for certain rights of appeal of FinCEN's
determinations with respect to awards. Consistent with this provision,
proposed 31 CFR 1010.930(g)(1) would describe claimants' appeal rights
and provide notice that any determination with respect to an award
application, including whether, to whom, or in what amount to make
awards, shall be at FinCEN's discretion.
With regard to the appeal process, proposed 31 CFR 1010.930(g)(1)
would state that, consistent with 31 U.S.C. 5323(f), a claimant may
file an appeal with the appropriate court of appeals of the United
States not more than 30 calendar days after the determination is issued
by FinCEN. Additionally, consistent with the statute, the proposed rule
would define the scope of an appeal: any final determination made by
FinCEN with respect to an award may be appealed except the
determination of the amount of an award made in accordance with 31
U.S.C. 5323(c)(1) and proposed 31 CFR 1010.930(e). Thus, claimants do
not have the right to appeal the amount of any award issued.
Furthermore, proposed 31 CFR 1010.930(g)(2) would designate the
materials that shall be included in the record on any appeal. As
proposed, the record includes any tips and applications for an award
submitted by a claimant (e.g., Form TCRs or Form WB-APPs), FinCEN's
preliminary determination, materials submitted by a claimant in
response to FinCEN's preliminary determination, and other materials
FinCEN considered on or after the issuance of a notice of covered
action in issuing the final or preliminary determination with respect
to the claimant's applications. If FinCEN permanently barred a
claimant, then the record on appeal may also include any materials
FinCEN considered on or after the occurrence of any circumstances with
respect to the claimant's permanent bar.
Certain categories of information, however, would be excluded from
the record of appeal under proposed 31 CFR 1010.930(g)(3).
Specifically, exempted information includes any pre-decisional or
internal deliberative process materials or any materials containing
information that is classified, law enforcement sensitive, reported
pursuant to the BSA, or is otherwise protected from disclosure, such as
grand jury materials or discovery in covered actions or related actions
that are subject to a protective order. Under the proposed approach,
FinCEN may also exclude from the record on appeal any materials that do
not relate directly to the claimant when more than one claimant has
sought an award based on a single notice of covered action. Therefore,
as proposed, FinCEN may exclude from the record of appeal Form TCRs,
Form WB-APPs, or any other submissions or filings made by another
whistleblower or claimant in connection with the Whistleblower Program.
Additionally, documents and records held with or solely in the
possession of other government agencies would not be part of the record
on appeal. Under proposed 31 CFR 1010.930(g)(3), as applied to the
aforementioned example, information gathered by FinCEN from OFAC about
the role that the whistleblower's information played in OFAC's
investigation might be included in the record on appeal. However, any
information that OFAC did not share with FinCEN would not be a part of
the record on appeal.
For additional clarity, FinCEN notes that decisions regarding the
investigation or prosecution of allegations made by whistleblowers in
their submissions of original information are at the discretion of
Treasury or DOJ. Such decisions are not considered determinations or
dispositions under this part and are not appealable by whistleblowers.
H. Proposed 31 CFR 1010.930(h)--No Amnesty
Proposed 31 CFR 1010.930(h) would state that the Whistleblower
Program does not provide amnesty or immunity from any future
investigation by Treasury, DOJ, or any other agency or authority.
Whistleblowers who have not participated in misconduct would not need
amnesty. However, some whistleblowers who provide original information
that leads to the successful enforcement of a covered action or related
action may have participated in wrongdoing and, as a result of that
participation, may have potential exposure to civil or criminal
liability. The fact that a whistleblower may assist in investigations
conducted by, or enforcement actions brought by, Treasury or DOJ does
not preclude Treasury, DOJ, or another agency or authority from
bringing an action against the whistleblower for the whistleblower's
own conduct in connection with violations of the covered statutes or
other laws. These individuals would not be immune from prosecution.
Individuals who participated in wrongdoing may still have an
incentive to report information to FinCEN notwithstanding the fact that
the Whistleblower Program would not provide amnesty. Indeed,
whistleblowers with potential civil or criminal liability relating to
violations of the covered statutes that they report to FinCEN could
remain eligible for an award. Pursuant to proposed 31 CFR
1010.930(c)(5)(i)(B), a culpable whistleblower would be made ineligible
to receive an award based on their own wrongdoing only if the
whistleblower was convicted of a criminal violation related to the
covered action or related action.
IV. Request for Comment
FinCEN invites comment on all aspects of the proposed rule, and
specifically seeks comment on the following questions: \39\
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\39\ FinCEN also requests comments on a number of issues related
to the regulatory analysis. These are identified and discussed
separately in Section VI below. See, specifically Sections VI.E. and
F.
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1. Are the definitions of terms in proposed 31 CFR 1010.930(a)
sufficiently clear? Are there additional terms that should be
clarified?
2. Should FinCEN require that separate judicial or administrative
[[Page 16343]]
actions be successfully enforced at substantially the same time in
order to be considered one ``covered action''? Should there be a
specific time period during which the separate actions need be brought
in order to be successfully enforced ``at substantially the same
time''? When determining whether two or more judicial or administrative
actions brought by Treasury or DOJ should be considered one ``covered
action,'' is it appropriate for FinCEN to consider whether the actions
arise out of substantially the same facts? Should FinCEN also consider
any other factors?
3. Proposed 31 CFR 1010.930(b)(2) states that if a whistleblower
provides original information to a part of Treasury other than FinCEN,
or to DOJ, or to their employer, then the whistleblower must also
provide that same original information to FinCEN within a reasonable
time to be eligible for an award. Would it be clearer to set forth a
deadline in terms of a number of calendar days rather than require that
the whistleblower take an action within a ``reasonable time''? If it
would be clearer to set forth a deadline in terms of a number of
calendar days, what number would be appropriate?
4. Are the ineligibility criteria set forth in proposed 31 CFR
1010.930(c)(5) appropriate? Are there additional categories of
individuals that should be made ineligible to receive an award? For
example, should whistleblowers who obtained information: (i) because
the whistleblower was an officer, director, trustee, or partner of an
entity and another person informed the whistleblower of allegations of
misconduct, or the whistleblower learned the information in connection
with the entity's processes for identifying, reporting, and addressing
possible violations of law; or (ii) because the whistleblower was an
employee whose principal duties involved compliance or internal audit
responsibilities, still be eligible to receive an award if (a) the
whistleblower has a reasonable basis to believe that disclosure of the
information is necessary to prevent the relevant entity from engaging
in conduct that is likely to cause substantial injury to the U.S.
financial system or U.S. national security; or (b) the whistleblower
has a reasonable basis to believe that the relevant entity is engaging
in conduct that will impede an investigation of the misconduct?
5. Are the ineligibility criteria set forth in proposed 31 CFR
1010.930(c)(5)(i)(B), which states that whistleblowers who have been
convicted of a criminal violation related to the covered action or
related action, for which the whistleblower otherwise could receive an
award, too narrow? For example, should individuals who are liable for
civil violations related to the covered or related action also be
considered ineligible for an award? Or, are the provisions at proposed
31 CFR 1010.930(a)(3)(i) (excluding any monetary sanctions paid by a
whistleblower in calculating the monetary threshold for a covered
action), 31 CFR 1010.930(e)(3)(i)(A) (excluding monetary sanctions paid
by the whistleblower in calculating the amount of monetary sanctions
collected), and 31 CFR 1010.930(e)(3)(iii)(D) (considering the
culpability of the whistleblower in determining the amount of an award)
sufficient to prevent awarding culpable whistleblowers in those
circumstances?
6. Is ninety (90) calendar days after the publication of a notice
of covered action a reasonable amount of time to give whistleblowers to
complete and submit an application for an award based on that covered
action?
7. Should FinCEN require whistleblowers to bear responsibility for
determining whether and when a related action is successfully enforced?
Is one hundred and eighty (180) calendar days after the successful
enforcement of a related action a reasonable amount of time to give
whistleblowers to complete and submit an application for an award based
on that related action?
8. Are the criteria set forth in proposed 31 CFR
1010.930(e)(3)(iii) the appropriate factors for FinCEN to consider when
determining the specific amount of an award? Are there any additional
factors that FinCEN should also consider when determining the specific
amount of an award?
9. Does proposed 31 CFR 1010.930(e)(3)(iv), which states that when
30 percent of the monetary sanctions collected in any covered action or
related action(s), in total, is $15 million or less, then the award
payment to the whistleblower will be the maximum allowed, help to
incentivize insiders and others to come forward with tips? If so, is
the $15 million ceiling for invoking the rule appropriate, or is it
either too high or too low? Please explain.
10. Does proposed 31 CFR 1010.930(c)(5)(iv)(A)(1) strike the
appropriate balance between respecting a company's attorney-client
privilege and avoiding a chilling effect on whistleblowers?
11. Is the proposed organization of the regulations clear enough
for whistleblowers to be able to understand the process and the
requirements without the need for expert advice and guidance? Can the
proposed organization of the regulations be improved and, if so, how?
12. Is the separation of the discussion of eligibility criteria
from the discussion of FinCEN's adjudication of whistleblower award
applications helpful, or is the proposed organization confusing to the
reader?
V. E.O. 14294
Section 5 of E.O. 14294 directs that all future notices of proposed
rulemaking (NPRMs) and final rules published in the Federal Register,
the violation of which may constitute criminal regulatory offenses,
should include a statement identifying that the rule or proposed rule
is a criminal regulatory offense and the authorizing statute.\40\ E.O.
14294 directs agencies to draft this statement in consultation with
DOJ.
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\40\ E.O. 14294, ``Fighting Overcriminalization in Federal
Regulations'' 90 FR 20367 (issued May 9, 2025; published May 14,
2025), <a href="https://www.federalregister.gov/executive-order/14294">https://www.federalregister.gov/executive-order/14294</a>.
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E.O. 14294 further directs that the regulatory text of all NPRMs
and final rules with criminal consequences published in the Federal
Register after May 9, 2025 should explicitly state a mens rea
requirement for each element of a criminal regulatory offense,
accompanied by citations to the relevant provisions of the authorizing
statute.
Willful violations of the proposed regulations set forth in this
proposed rule may be subject to criminal penalties pursuant to 31
U.S.C. 5322 and regulations promulgated in 31 CFR Chapter X. The
statutory authority for criminal liability requires a mens rea of
willfulness as an element pursuant to 31 U.S.C. 5322(a) and 31 U.S.C.
5322(b). FinCEN's existing regulation, 31 CFR 1010.840, that sets out
criminal penalties for violations of regulations promulgated in 31 CFR
Chapter X also includes a mens rea of willfulness. In drafting this
statement, FinCEN has consulted with DOJ.
VI. Regulatory Analysis
FinCEN has analyzed the proposed rule pursuant to E.O.s 12866,
13563, and 14192,\41\ as well as the Regulatory
[[Page 16344]]
Flexibility Act (RFA),\42\ the Unfunded Mandates Reform Act (UMRA),\43\
and the Paperwork Reduction Act (PRA).\44\ This proposed rule is not
expected to have an annual effect on the economy of $100 million or
otherwise constitute a ``significant regulatory action'' as defined in
section 3(f) of E.O. 12866. Accordingly, this rule would not be an E.O.
14192 regulatory action. Also, pursuant to the RFA, FinCEN certifies
that the proposed rule would not have a significant economic impact on
a substantial number of small entities. Furthermore, pursuant to the
UMRA, FinCEN has concluded that the proposed rule would not result in
an expenditure of $193 million or more annually by state, local, and
Tribal governments or by the private sector.\45\
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\41\ See infra Section VI.B. for analysis required pursuant to
E.O.s 12866 and 13563. E.O. 12866, Regulatory Planning and Review,
58 FR 51735 (Sept. 30, 1993), <a href="https://www.federalregister.gov/executive-order/12866">https://www.federalregister.gov/executive-order/12866</a>; E.O. 13563, Improving Regulation and
Regulatory Review, 76 FR 3821 (Jan. 21, 2011), <a href="https://www.govinfo.gov/content/pkg/FR-2011-01-21/pdf/2011-1385.pdf">https://www.govinfo.gov/content/pkg/FR-2011-01-21/pdf/2011-1385.pdf</a>. See
also E.O. 14192, Unleashing Prosperity Through Deregulation, 90 FR
9065 (Feb. 6, 2025) <a href="https://www.federalregister.gov/documents/2025/02/06/2025-02345/unleashing-prosperity-through-deregulation">https://www.federalregister.gov/documents/2025/02/06/2025-02345/unleashing-prosperity-through-deregulation</a>.
\42\ See infra Section VI.C. for analysis required pursuant to
the Regulatory Flexibility Act of 1980 (RFA), Public Law 96-354
(Sept. 19, 1980). 5 U.S.C. 601 et seq.
\43\ See infra Section VI.D. for analysis required pursuant to
the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4
(Mar. 22, 1995).
\44\ See infra Section VI.E. for analysis required pursuant to
the Paperwork Reduction Act of 1995 (PRA), Public Law 96-511 (May
22, 1995).
\45\ The U.S. Bureau of Economic Analysis reports the annual
value of the gross domestic product implicit price deflator for
calendar year 1995 (the year UMRA was enacted) as 66.939, and as
128.974 for calendar year 2025 (the most recent available). Thus,
the inflation-adjusted estimate for $100 million is 128.974 / 66.939
x $100 million, or $192.7 million. See U.S. Bureau of Economic
Analysis, Table 1.1.9. Implicit Price Deflators for Gross Domestic
Product, <a href="https://apps.bea.gov/iTable/?reqid=19&step=3&isuri=1&1921=survey&1903=13#eyJhcHBpZCI6MTksInN0ZXBzIjpbMSwyLDMsM10sImRhdGEiOltbIk5JUEFfVGFibGVfTGlzdCIsIjEzIl0sWyJDYXRlZ29yaWVzIiwiU3VydmV5Il0sWyJGaXJzdF9ZZWFyIiwiMTk5NSJdLFsiTGFzdF9ZZWFyIiwiMjAyNSJdLFsiU2NhbGUiLCIwIl0sWyJTZXJpZXMiLCJBIl1dfQ==">https://apps.bea.gov/iTable/?reqid=19&step=3&isuri=1&1921=survey&1903=13#eyJhcHBpZCI6MTksInN0ZXBzIjpbMSwyLDMsM10sImRhdGEiOltbIk5JUEFfVGFibGVfTGlzdCIsIjEzIl0sWyJDYXRlZ29yaWVzIiwiU3VydmV5Il0sWyJGaXJzdF9ZZWFyIiwiMTk5NSJdLFsiTGFzdF9ZZWFyIiwiMjAyNSJdLFsiU2NhbGUiLCIwIl0sWyJTZXJpZXMiLCJBIl1dfQ==</a>.
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To facilitate completion of these distinct statutorily required
assessments, FinCEN conducted a broader, general analysis of the
anticipated economic effects of the rule as proposed. The main findings
of this analysis are presented first,\46\ and are referenced as
applicable in the remaining subsections of the assessment. Finally,
this section concludes with additional requests for comment specific to
the assessment, both as a whole and with respect to select assumptions,
analytical frameworks, methodological approaches, and inferences upon
which it has relied.\47\ Comments responsive to the specific questions
in Sections V.E. and V.F. are invited, as are any additional data,
studies, or other information that would substantively improve the
accuracy or completeness of the analysis as proposed and presented
below.
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\46\ See infra Section VI.A. for analysis as part of the broad
economic considerations of this proposed rule and the enhancements
expected to the Whistleblower Program.
\47\ See infra Section VI.F. for requests for comments related
to the regulatory analysis.
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A. Broad Economic Considerations
In assessing the potential economic effects of the proposed rule,
FinCEN has considered the underlying market failures and perceived
inefficiencies that the proposed rule and resulting whistleblower
program would address. The fundamental economic considerations include
both the general factors that give rise to the necessity for a
whistleblower program as a mechanism of market discipline and the
specific structure of incentives under the currently operating program.
FinCEN appreciates that, to improve upon the status quo and thereby
achieve economic benefits as a consequence of rulemaking, the proposed
rule would need to offset the incremental expenditures--engendered by
activities that, but for the proposed rule, would not be incurred--with
equal or greater countervailing economic and social gains. On the
whole, FinCEN believes that such an outcome would flow from the
proposed rule being implemented but notes that such future economic
effects might be difficult to identify empirically.
Due to the variety of incremental changes to the status quo that
successful implementation of the proposed rule could introduce, it is
challenging to assess with precision the aggregate economic effect--
including the costs and benefits--of the proposed rule. However, a
successful whistleblower program could increase the efficiency of
investigative activity by improving the focus and efficacy of such
activity. Furthermore, an increase in the observed probability that a
federal investigation responsive to a whistleblower tip results in
monetary sanctions could deter the types of illegal activities that
could trigger whistleblowing.
1. Baseline Considerations
To assess the anticipated regulatory impact of the proposed rule,
FinCEN first established select factors about the current state of the
world as it pertains to activities relevant to the proposed rule. This
is consistent with established best practices that the expected
economic effects of a proposed rule be measured against the status quo
as a primary counterfactual. Among other factors, FinCEN's economic
assessment considered the proposed rule in the context of existing
regulatory requirements,\48\ the primary groups likely to be affected
by the rule,\49\ and pertinent elements of current affected party
characteristics, activities, common practices, and incentives.\50\ Each
of these elements is discussed in its respective subsection below.
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\48\ See infra Section VI.A.1.b. for an overview of the economic
analysis of the proposed rule in the context of existing regulatory
requirements.
\49\ See infra Section VI.A.1.a. for the economic analysis on
the primary groups likely to be affected by the proposed rule.
\50\ See infra Sections VI.A.1.b. and c. for the economic
analysis on the characteristics, activities, and common practices of
current affected parties.
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a. Baseline of Affected Parties
FinCEN considered that a variety of persons might be considered
potentially affected by the proposed rule because of the broad scope of
activities regulated by the covered statutes in the proposed rule and
the unique nature of certain of those statutes. As a general matter, a
rule need not impose direct obligations on a person for that person to
be considered part of the baseline population of potentially affected
parties. Instead, baseline populations are meant to include any parties
that, when considering the expected economic effects of a rule, FinCEN
could reasonably anticipate will experience a change in costs (monetary
or otherwise) or benefits that would result from adoption of the rule.
These changes may occur due to actions taken by the parties themselves
or may be experienced as a direct consequence of actions taken by
others in response to the rule in question. While FinCEN acknowledges
that many additional groups of persons might be indirectly affected by
the rule as proposed, it considered the following three groups as those
expected to experience the primary direct effects: (i) current and
potential whistleblowers; (ii) potential subjects of Form TCR; and
(iii) the government departments and agencies that would receive
information from Form TCR submissions.
i. Current and Potential Whistleblowers
One of the primary parties FinCEN expects the proposed rule to
affect is the population of current and future whistleblowers who
submit tips to FinCEN. As discussed above and below, FinCEN intends for
the proposed rule, the Whistleblower Program, and the proposed
reporting mechanisms, including Forms TCR and WB-APP, to benefit these
affected parties by reducing the costs and risks of reporting potential
violations and ensuring maximum levels of private benefits to doing so
in cases where whistleblower
[[Page 16345]]
information or analysis contributes to investigation or enforcement
activities that, at minimum, would not otherwise have been undertaken
with the same success absent greater costs or other difficulty. Based
on an analysis of original tips submitted in calendar years 2021
through 2024, FinCEN receives approximately eighty-seven (87) original
submissions of whistleblower tips per year on average,\51\ from which
this assessment infers that there have been as many as eighty-seven
(87) unique whistleblowers per year on average. Because these numbers
represent an estimate of the population of whistleblowers based on data
from a historical period before the enhancements to the program
envisioned by the proposed rule take effect, FinCEN anticipates that
the total population would increase in light of the increased benefits
and efficiencies of the Whistleblower Program as proposed, potentially
doubling (or more) within a short period following the effective date
of a final rule.\52\
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\51\ See infra Table 3 (which describes tip submissions and
applications for awards by calendar year of receipt). Because 2021
was the first year following the enactment of the AML Act, which
effectively led to the initial submission of whistleblower tips, an
average number of tips including that year may be materially lower
than the actual number of original tips expected to be received in
years subsequent to the effective date of the final rule for which
this proposal is being made.
\52\ See infra Table 3 and Section VI.E.1. on the historical tip
volumes and the estimated number of annual responses forecast after
the enhancements to the program envisioned by the proposed rule take
effect.
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ii. Potential Subjects of Form TCR
The proposed rule is intended to facilitate whistleblower reporting
of possible violations of a covered statute.\53\ Accordingly, entities
with obligations under those covered statutes--entities that could
therefore theoretically become subjects of a Form TCR--constitute a
second group of parties that could potentially be affected by the
proposed rule. However, FinCEN does not expect that all such
potentially affected parties would actually be directly affected by
this whistleblower rule, as proposed. Instead, FinCEN would only
consider a potential subject of a Form TCR to be an affected party if
the potential subject were to undertake new activities that it would
not have undertaken if the rule had not gone into effect (for example,
because the potential subject perceived a heightened probability either
of being reported to the federal government for potential violations,
or of having such matters brought to its attention by employees
motivated by the rule). Without such a perceived change, there would be
no reason to expect the potential subject to undertake any novel
activities involving quantifiable expenditures. In addition, for a
potentially affected party to be considered an actual affected party
for this rule, the activities would need to be motivated by this rule
and not, for example, by existing incentives applicable to the party
pursuant to the whistleblower programs administered by other agencies,
as explained below in the Regulatory Baseline. Bearing in mind these
challenges, which are inherent to estimating the size of the actually
affected population relative to the potentially affected population,
FinCEN considers the actual affected population to be a very small
portion of the potentially affected population.
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\53\ See supra Section II.B. for a description of the covered
statutes.
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Given the range and size of the industries from which eligible
whistleblowers might emerge, the population of potentially affected
parties is quite large, although FinCEN reiterates its belief that the
actual affected population will be a very small portion of the total.
Table 1 and Table 2 present FinCEN's estimates of the primary
populations of covered financial institutions under the BSA and select
industry populations that could potentially be subjects of Form TCRs
relating to alleged violations of the BSA, IEEPA, TWEA, and the Kingpin
Act,\54\ respectively. To reduce the likelihood of double-counting
potentially affected parties, FinCEN attempted to exclude certain
categories of entities from the count in one population table if they
were already included in the other population table. This presentation
is not intended to imply that parties listed in one table but not the
other have possible obligations only under one type of covered statute.
Certain potentially affected entities may engage in a number of
activities that could violate different covered statutes.
Alternatively, certain potentially affected entities may engage in one
activity that could violate more than one covered statute within the
scope of the proposed Whistleblower Program. Because of the concern
that double-counting would lead to an overestimate of the population of
potentially affected parties, FinCEN attempted to de-duplicate entity
categories between the baseline populations tables; however, in some
cases de-duplication was not practicable.\55\
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\54\ The organization of primary industry categories as
presented in Table 2 reflect the options from which individuals may
select in the proposed Form TCR, which asks the whistleblower to
describe the type of industry to which the tip relates to, if the
whistleblower selected to describe the nature of the tip as a
violation of or evasion of U.S. economic sanctions.
\55\ Where de-duplication was not practicable across categories
within the same table, this data issue is identified in a
corresponding table endnote. Additionally, certain entities may be
double counted across the two tables, including certain health
insurance companies and virtual asset service providers (VASPs)
that, because of a lack of comparability in the underlying sources
of the original data used, could not be de-duplicated.
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Table 1 presents an estimate of the primary population of entities
subject to FinCEN regulations implementing the BSA.
BILLING CODE 4810-02-P
[[Page 16346]]
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Table 2 presents population estimates of select entities with
obligations under IEEPA, TWEA, and the Kingpin Act that could thereby
potentially become the subject of a Form TCR if suspected of a
violation by a whistleblower. Industries presented in Table 2 are for
illustrative purposes only. This table does not, and is not intended
to, represent the full scope of entities that could become the subject
of a Form TCR under IEEPA, TWEA, or the Kingpin Act; rather, it is
presented only to highlight the size of the populations of the
categories that are set forth in the proposed Form TCR.\56\ Inclusion
in this table, as in the proposed Form TCR, does not imply that a
category of business is expected to be the subject of a TCR more
frequently than other categories.
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\56\ The proposed Form TCR provides individuals the opportunity
to write in the subject's industry if that industry is not otherwise
listed in the proposed Form TCR. This table excludes that write in
option. See Appendix A for proposed Form TCR.
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BILLING CODE 4810-02-C
Because the industries and populations in Table 1 and Table 2
present a non-exhaustive list of industries and persons that are
potentially subjects of a Form TCR, the total population of potential
subjects may be considerably larger than the approximately 2 million
entities estimated in the two tables. While the total population of
entities that are potential subjects of a Form TCR for
[[Page 16350]]
possible violations of the BSA is generally limited to financial
institutions covered by 31 CFR chapter X (see Table 1),\57\ the
affected populations under IEEPA, TWEA, and the Kingpin Act have no
such limits. And while many of the primary potentially affected parties
under these three statutes may be included in the population counts in
Table 2, many other potentially affected parties under these statutes
remain untabulated because quantification of any meaningful reliability
was not practicable. FinCEN has instead qualitatively identified these
additional potentially affected entities in the respective discussions
below, grouped by particular programs under IEEPA, TWEA, and the
Kingpin Act.
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\57\ Table 1 does not include population estimates for certain
groups that, depending on facts and circumstances, might also have
obligations under the BSA. These groups include, for example,
persons involved in real estate closings and settlements;
pawnbrokers; travel agencies; and businesses engaged in vehicle
sales, including automobile, airplane, and boat sales, among others.
Some of these groups are likely to be included in the count of other
affected parties in Table 2, while others may not be represented in
the tabulated estimates. FinCEN's analysis has considered the
potential economic costs to these, and other untabulated parties
discussed elsewhere in Section VI.A.1.a.ii, with equal weight in its
assessment of the benefits and costs of the proposed rule.
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In general, U.S. economic and trade sanctions under these three
statutes apply to all persons under U.S. jurisdiction, including all
U.S. citizens and permanent residents regardless of where they are
located, all individuals and entities within the United States, and all
U.S. incorporated entities and their foreign branches. Such persons are
prohibited from transactions involving specific persons (including
those on OFAC's Specially Designated Nationals and Blocked Persons
List, or OFAC's SDN List), or involving specific regions or countries,
or related to particular sectors of a country's economy, unless
authorized by OFAC or exempted by applicable legal authority. Non-U.S.
persons are also subject to certain sanctions. For example, non-U.S.
persons are prohibited from causing or conspiring to cause U.S. persons
to violate U.S. sanctions, as well as engaging in conduct that evades
U.S. sanctions. Certain programs also require foreign persons
reexporting certain goods, technology, or services from the United
States to comply with U.S. sanctions, even if no U.S. persons are
involved in the reexport.
Additionally, certain entities or persons may currently be covered
by specific IEEPA programs, such as the Data Security Program or the
Outbound Investment Security Program.\58\ The Data Security Program
applies to U.S. persons, including citizens, lawful permanent
residents, and U.S. organized entities, which are prohibited from
engaging in certain data transactions that could result in access to
bulk sensitive personal data by foreign adversaries with countries of
concern.\59\ It also encompasses covered persons, which refers to
individuals or entities that are owned or controlled by, or subject to
the jurisdiction of a country of concern.\60\ Data brokers, technology
vendors, and other third parties that conduct covered data transactions
involving access by a country of concern or covered person to any
government-related data or bulk U.S. sensitive personal data, are
subject to enforcement under the Data Security Program.
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\58\ See supra note 19 (discussing the impact of the COINS Act
on the future applicability of FinCEN's whistleblower program on the
Outbound Investment Security Program).
\59\ See 28 CFR 202.256 (describing requirements pursuant to
E.O. 14117 where U.S. persons are prohibited from engaging in
certain data transactions that could result in access to bulk
sensitive personal data by foreign adversaries with countries of
concern); see supra note 20 describing E.O. 14117.
\60\ Id. at 202.211 (describing covered persons subject to bulk
sensitive personal data prohibitions in E.O. 14117); see supra note
20 describing E.O. 14117.
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The Outbound Investment Security Program applies primarily to U.S.
persons, including citizens, lawful permanent residents, and U.S.
organized entities, which are subject to restrictions on certain
investments involving national security technologies, including but not
limited to semiconductors, quantum computing, and artificial
intelligence in countries of concern.\61\ It also applies to covered
foreign persons, which include a person of a country of concern that
engages in a covered activity in the above mentioned national security
technologies, or a person who directly or indirectly holds a board
seat, a voting or equity interest, or any contractual power to direct
or cause the direction of management of an entity to engage in a
covered activity that also meets certain financial criteria.\62\ The
Outbound Investment Security Program also applies to controlled foreign
entities of U.S. persons that are incorporated in or otherwise
organized under the laws of a country other than the United States, and
all U.S. persons must ensure their compliance with the rule's
prohibitions and notification requirements.\63\ Additionally, it
reaches indirect participants, including individuals or entities that
facilitate or cause a prohibited transaction, even through
intermediaries or layered investments.\64\
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\61\ 31 CFR 850.101 (describing scope of requirements pursuant
to E.O. 14105 with respect to requirements of U.S. persons to
provide notification of information relative to certain transactions
involving covered foreign persons and that prohibit U.S. persons
from engaging in certain other transactions involving covered
foreign persons); see supra note 19 for a description of E.O. 14105.
\62\ Id. at 850.209 (defining ``covered foreign person''
pursuant to E.O. 14105); see also id. 850.217 (defining ``notifiable
transaction'' pursuant to E.O. 14105; 850.224 enumerating notifiable
and prohibited transactions under covered activities pursuant to
E.O. 14105); see supra note 19 (for a description of E.O. 14105).
\63\ Id. at 850.101(c) (describing regulations implementing E.O.
14105 to identify categories of covered transactions that are
notifiable transactions); see also id., at 850.206 (defining
``controlled foreign entity'' pursuant to E.O. 14105); supra note 19
(for a description of E.O. 14105).
\64\ Id. at 850.210, note 1 to 850.210 (defining ``covered
transaction'' pursuant to E.O. 14105); see also supra note 19 (for a
description of E.O. 14105).
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iii. Government Departments and Agencies
The primary government departments and agencies expected to be
affected by the proposed rule are Treasury and DOJ.\65\ As discussed
below,\66\ FinCEN is proposing this rule, which proposes to establish
the Whistleblower Program, with a view toward enhancing the efficiency
with which these agencies conduct their investigative and enforcement
related work.\67\ A brief description of select current activities
undertaken by these parties in connection with alleged violations of
the covered statutes in the absence of the proposed rule is included
below.\68\
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\65\ Pursuant to the statute and proposed rule, under certain
circumstances, FinCEN would also make original information available
to appropriate agencies and authorities other than Treasury and
Justice, as FinCEN deems appropriate. This would include other
appropriate Federal agencies that have the authority to successfully
enforce related actions that, like covered actions, could result in
the imposition of monetary sanctions. This might include, for
example, the U.S. Department of Commerce's Bureau of Industry and
Security, which is responsible for enforcing export controls.
\66\ See infra Section VI.A.2.a. (discussing the anticipated
benefits of the proposed rule).
\67\ See infra Section VI.A.1.c.iii. (discussing the baseline of
current practices and activities by affected government departments
and agencies).
\68\ See infra Sections VI.A.1.c.ii. and iii. (discussing market
practices and activities by parties expected to be affected
including, but not limited to, whistleblowers and their legal
representatives, potential subjects of Form TCRs, and Federal
departments and agencies).
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b. Regulatory Baseline
FinCEN has evaluated the economic effects of the proposed rule,
which would structure and operationalize a Whistleblower Program,
including how the proposed rule would differ from current statutory
requirements and current practices. The regulatory
[[Page 16351]]
baseline, against which the economic effects of the proposed rule are
considered, includes the statutory framework for 31 U.S.C. 5323 as set
forth in section 6314 of the AML Act and the AML Whistleblower
Improvement Act, which were enacted into law as part of the NDAA and
the Consolidated Appropriations Act, 2023, respectively.\69\
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\69\ As discussed below, the AML Whistleblower Improvement Act
established the ``Financial Integrity Fund,'' which is a revolving
fund used to pay whistleblower awards. 31 U.S.C. 5323(b)(2)-(3).
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The regulatory baseline also includes the statutes, regulations,
orders, and programs that potential subjects of future Form TCRs have
obligations under, as encompassed by the ``covered statutes'' defined
in the proposed rule.\70\ Requirements and obligations under the
covered statutes exist independently of the proposed rule and status
quo prior to the issuance of any final rule. There is no reason to
expect that these would change as a direct consequence of establishing
the Whistleblower Program, as proposed in this notice. For purposes of
assessing the expected economic effects of the proposed rule, FinCEN
excluded from its analysis any anticipated changes in affected party
behavior that would arise from necessary compliance activities newly
undertaken with respect to these covered statutes as well as any
anticipated changes in activities that might arise from changes to
covered statutes that would reasonably be expected to occur
independently of the proposed rule.
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\70\ See supra Sections II.B. (for an overview of covered
statutes); Sections III.C.2.a. and b. for regulatory definitions of
``covered actions'' and ``related actions'' that describe the
statutes, regulations, orders, and programs under which potential
subjects of future Form TCRs may have statutory and regulatory
obligations).
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c. Baseline of Current Practices and Activities
FinCEN took certain aspects of the current activities and practices
of parties expected to be affected by the proposed rule into
consideration when forming expectations about its anticipated economic
effects. Among other things, FinCEN considered trends in the submission
of tips by whistleblowers, other activities by whistleblowers and the
potential subjects of Form TCR, and select characteristics of
investigative and enforcement activities undertaken by Treasury and DOJ
related to covered statutes under the proposed rule.
i. Current FinCEN Whistleblower Practices
As noted above, the statutory framework under which FinCEN has
received tips from whistleblowers was promulgated in 2020 and enhanced
in 2021.\71\ Between the first and second year in which FinCEN received
tips, the number of original tips received increased more than sixfold,
then nearly doubled again in the subsequent year.
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\71\ See supra Section II.A. (describing the Whistleblower
Program's statutory framework under the AML Act and the AML
Whistleblower Improvement Act); see also supra Section VI.A.1.b.
(describing the regulatory baseline, which includes the statutes,
regulations, orders, and programs that potential subjects of future
Form TCRs have obligations under, as encompassed by the ``covered
statutes'' defined under the proposed rule); see also infra Section
VI.A.1.c. ii. (describing the statutory and regulatory violations
involving potential subjects of Form TCR). As described in Section
II, the AML Act amended 31 U.S.C. 5323 by replacing the
whistleblower provisions in that section with enhanced award
provisions and protections. Prior to the enactment of the AML Act,
the whistleblower provisions of the BSA generated only de minimis
whistleblower activity, and thus, FinCEN is not factoring that pre-
AML Act activity into the baseline of current practices and
activities.
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Table 3 presents time series data and forecasts of tips received by
FinCEN \72\ in the first five years of operation, including both
original and supplemental submissions as well as applications for
awards in the years following initial tip submissions in which cases
associated with previously reported matters were resolved.
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\72\ Tips received by FinCEN include both those directly
submitted to FinCEN and those shared by other government departments
or agencies with FinCEN because of a potential nexus with FinCEN's
covered statutes and implementing regulations.
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[[Page 16352]]
Table 4 presents the same data and related forecasts organized by
the lifecycle subsequent to the year in which each original tip was
received. This data indicates that, on average, approximately sixty-one
(61) percent of tips submitted are subsequently supplemented, and that
each tip that is subsequently supplemented is, on average, supplemented
twice. Additionally, it appears that over the period in which cases
were resolved that could have been informed by whistleblower tips, the
individuals who submitted approximately three (3) percent of original
tips later submitted an application for an award.
[GRAPHIC] [TIFF OMITTED] TP01AP26.005
BILLING CODE 4810-02-C
ii. Other Current Market Practices and Activities
Whistleblowers and Their Legal Representatives
In the absence of detailed studies of employees of potential
subjects of Form TCR or other persons who become whistleblowers, FinCEN
has conceived of the whistleblower population as a cross-section of the
total population of individuals employed by potential subjects of Form
TCR. This cross-section includes individuals of all levels of
sophistication. Crucially, it includes both individuals able and
willing to perform all necessary tasks, including filing all necessary
forms, associated with being a whistleblower under the proposed rule,
and individuals who consider themselves unable to do so without
assistance or who prefer to engage professional help even if they
consider such an engagement not strictly necessary.
FinCEN is aware that a relatively specialized part of the community
of attorneys in the United States is available to provide such
assistance to whistleblowers under all types of whistleblower programs,
and that it regularly does so.\73\ FinCEN expects that such attorneys
will make themselves available to assist whistleblowers under the
program that would be created by the proposed rule. FinCEN has
therefore divided the whistleblower population into those who act alone
and those who choose to engage counsel (although FinCEN has had to make
assumptions about the relative size of the two groups). The division
has carried over into calculation of the burden associated with the
various elements of acting as a whistleblower, requiring consideration
of the burden of an activity when undertaken by a whistleblower acting
alone, and the burden of the same activity when undertaken by legal
counsel on behalf of a whistleblower. When assessing the economic
burden of the latter type of activity, FinCEN has used an aggregate
measure of the financial cost of billed attorney time as a proxy for
the economic burden of legal representation. Although FinCEN is aware
that attorneys representing whistleblowers routinely provide
representation on a contingent fee basis and may indeed be required to
do so by applicable state bar ethics rules, FinCEN is nonetheless
considering burden in terms of overall costs to the economy. FinCEN is
therefore taking into account both the ultimately successful legal
representation that is compensated by a percentage of the award
obtained by a whistleblower and the ultimately unsuccessful legal
representation that is not compensated at all. FinCEN assumes that the
continuing existence of attorneys that specialize in representing
whistleblowers means that, overall, successful legal representation
adequately compensates such attorneys for the resources expended on
both successful and unsuccessful representation. FinCEN also assumes
that the aggregate cost of billed attorney time is a good initial
measure of adequate compensation. FinCEN welcomes comments that can
sharpen the analysis and calculation of this aspect of the burden
associated with the proposed rule.
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\73\ See, e.g., Alexander I. Platt, The Whistleblower Industrial
Complex, Yale Journal on Regulation 40:688 (2023), at 695.
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Potential Subjects of Form TCR
Businesses subject to the covered statutes may already be affected
by a number of incentives to take action to ensure compliance with the
covered statutes, including by implementing internal audit and
compliance programs. The number and range of these incentives, which
can be organized into two categories, voluntarily self-disclosure
incentives
[[Page 16353]]
and already extant whistleblower programs, is significant.
Voluntary Self-Disclosure Incentives
The components at Treasury and Justice that enforce the covered
statutes have policies that incentivize companies to voluntarily self-
disclose violations of those statutes. For example, Justice's Criminal
Division has a Corporate Enforcement and Voluntary Self-Disclosure
Policy (CEP) that incentivizes companies to voluntarily self-disclose
misconduct, fully cooperate with the Criminal Division's
investigations, and timely and appropriately remediate the
misconduct.\74\ The potential benefits include a declination (i.e., a
decision by the Criminal Division that it will not prosecute a
company), non-prosecution agreement, and other resolutions that may
include substantially reduced monetary penalties among other benefits.
In 2025, the Criminal Division further incentivized companies by
revising the CEP and clarifying that additional benefits are available
to companies that self-disclose and cooperate.\75\ In connection with
the release of the revised CEP, the Head of the Criminal Division
announced: ``This is the time for companies to self-report. It is the
time to do the work, come in early, cooperate, and remediate. The
Criminal Division's policies give clear benefits to those who do.''
\76\
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\74\ See DOJ, Justice Manual Sec. 9-47.120--Criminal Division
Corporate Enforcement and Voluntary Self-Disclosure Policy (2025),
<a href="https://www.justice.gov/jm/jm-9-47000-foreign-corrupt-practices-act-1977#9-47.120">https://www.justice.gov/jm/jm-9-47000-foreign-corrupt-practices-act-1977#9-47.120</a>.
\75\ DOJ Press Release, Head of Justice Department's Criminal
Division Matthew R. Galeotti Delivers Remarks at American Conference
Institute Conference (June 10, 2025), <a href="https://www.justice.gov/opa/speech/head-justice-departments-criminal-division-matthew-r-galeotti-delivers-remarks-american">https://www.justice.gov/opa/speech/head-justice-departments-criminal-division-matthew-r-galeotti-delivers-remarks-american</a>.
\76\ Id.
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Justice's National Security Division similarly incentivizes
companies to voluntarily self-disclose all potentially criminal
violations of the U.S. government's primary export control and
sanctions regimes.\77\ The policy generally provides that, absent (one
of several) aggravating circumstances, the National Security Division
will not seek to prosecute or assess a fine for companies that:
voluntarily self-disclose potential criminal violations of U.S. export
controls or sanctions laws; fully cooperate; and timely and
appropriately remediate the issues (``NSD VSD Policy''). In 2024, the
policy was revised to also include new potential safe harbor for
acquirers in the mergers and acquisitions context addressing national
security violations (the ``M&A Policy''). Specifically, when a company
undertakes a lawful, bona fide acquisition of another company and,
through due diligence conducted either shortly before or shortly after
the transaction, becomes aware of potential criminal violations of
export control, sanctions, or other laws affecting U.S. national
security by the acquired company, the acquiror may qualify for the
additional protections of the M&A Policy by making a voluntary self-
disclosure to NSD subject to the requirements of the M&A Policy.\78\
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\77\ See DOJ, Justice Manual Sec. 9-90.625--Export Control and
Sanctions Enforcement Policy for Business Organizations (2025),
<a href="https://www.justice.gov/jm/jm-9-90000-national-security#9-90.625">https://www.justice.gov/jm/jm-9-90000-national-security#9-90.625</a>.
\78\ Id.
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OFAC encourages anyone who may have violated OFAC-administered
sanctions programs, or anyone who is aware of potential violations, to
disclose the apparent or potential violation to OFAC. Voluntary self-
disclosure to OFAC is considered a mitigating factor by OFAC in
enforcement actions, and pursuant to OFAC's Economic Sanctions
Enforcement Guidelines \79\ will result in a reduction in the base
amount of any proposed civil penalty.\80\
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\79\ See generally 31 CFR 501 (App. A) (for OFAC reporting,
procedures, and penalties regulations).
\80\ See OFAC, Frequently Asked Questions, FAQ 13, <a href="https://ofac.treasury.gov/faqs/13">https://ofac.treasury.gov/faqs/13</a>.
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The Outbound Investment Security Program E.O. also provides a
process for a U.S. person to submit a voluntary self-disclosure if they
believed their conduct may have resulted in a violation of any part of
the rule.\81\ Such disclosure would be taken into account as a
mitigating factor in determining the appropriate response, including
the potential imposition of penalties, if OIS determines that there
was, in fact, a violation.
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\81\ See 88 FR 54867 (Aug. 9, 2023); see also 31 CFR 850.704
(describing Treasury's requirements for voluntary self-disclosure of
conduct that may have resulted in a violation of any part of the
Outbound Investment Security Program order).
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Whistleblower Programs
In addition to voluntary self-disclosure, there are already a
number of federal whistleblower programs that may incentivize companies
to monitor their compliance with the covered statutes. As previously
discussed, certain parts of the FinCEN Whistleblower Program are
already operational. FinCEN has established an Office of the
Whistleblower, and since May 2021, whistleblowers have been submitting
tips--primarily by email--to the Office of the Whistleblower. The
Office of the Whistleblower's staff conduct an initial review of
incoming tips to, among other things, determine whether the submitted
information should be further shared, including with FinCEN's Office of
Enforcement, OFAC, and Justice's Criminal Division and National
Security Division. These and the other offices with which the Office of
the Whistleblower share the information submitted by whistleblowers
have complete discretion to make decisions about whether to open an
investigation or bring a civil enforcement action or criminal case
based on the information contained in the tip, and how to conduct any
resulting investigation, enforcement action, or prosecution.
In addition, depending on the specific nature of the matter they
wish to report, whistleblowers may already have other mechanisms
through which to report actionable tips, complaints, or reports, and
may already be pursuing such options. Whistleblowers who wish to submit
tips to Justice about violations of the covered statutes, or
conspiracies to violate these laws, may already do so.\82\ These
include violations of the BSA, IEEPA, TWEA, and the Kingpin Act. In
2024, Justice launched the Criminal Division Corporate Whistleblower
Pilot Program. In 2025, Justice's Criminal Division reviewed and
expanded the pilot whistleblower program. Justice's whistleblower
program seeks whistleblower tips related to any of the following
subject areas:
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\82\ See generally DOJ, Criminal Division Corporate
Whistleblower Awards Pilot Program (issued Aug. 1, 2024; revised May
12, 2025), <a href="https://www.justice.gov/criminal/criminal-division-corporate-whistleblower-awards-pilot-program">https://www.justice.gov/criminal/criminal-division-corporate-whistleblower-awards-pilot-program</a>.
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<bullet> Violations by financial institutions, their insiders, or
agents, including schemes involving money laundering, anti-money
laundering compliance violations, registration of money transmitting
businesses, and fraud, including but not limited to fraud against or
non-compliance with financial institution regulators.
<bullet> Violations by or through companies related to sanctions
offenses, material support of terrorism, or cartels and transnational
criminal organizations, including money laundering, narcotics,
Controlled Substances Act, and other violations.
<bullet> Violations related to foreign corruption and bribery by,
through, or related to companies, including violations of the Foreign
Corrupt Practices Act, violations of the Foreign Extortion Prevention
Act, and violations of the money laundering statutes.
<bullet> Violations committed by or through companies related to
the payment of bribes or kickbacks to domestic public officials,
including but not limited to
[[Page 16354]]
federal, state, territorial, or local elected or appointed officials
and officers or employees of any government department or agency.
<bullet> Violations committed by or through companies related to
(a) federal health care offenses and related crimes involving health
care benefit programs, and (b) fraud against patients, investors, and
other non-governmental entities in the health care industry.
<bullet> Violations by or through companies related to fraud
against, or the deception of, the United States in connection with
federally funded contracting or federal programs, where such fraud does
not involve health care or illegal health care kickbacks.
<bullet> Violations by or through companies related to trade,
tariff, and customs fraud.
<bullet> Violations by or through companies related to federal
immigration law.\83\
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\83\ See DOJ, Corporate Whistleblower Awards Pilot Program
(issued Aug. 1, 2024; revised May 12, 2025) at Section II.2.3,
<a href="https://www.justice.gov/criminal/media/1400041/dl?inline">https://www.justice.gov/criminal/media/1400041/dl?inline</a>.
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A whistleblower who provides Justice with original and truthful
information about corporate misconduct that results in a successful
forfeiture may be eligible for an award from Justice.\84\
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\84\ While both DOJ's and FinCEN's respective whistleblower
programs seek tips about violations of anti-money laundering laws
and sanctions violations, the basis for calculating monetary awards
is different: DOJ bases its awards solely on the forfeited amount,
while FinCEN would exclude the amount of forfeited funds from its
calculation pursuant to 31 U.S.C. 5323(a)(2)(B)(ii) and base the
award amount solely on the imposition of other monetary sanctions
(which are primarily penalties).
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Whistleblowers may also submit tips about financial crimes to
various federal whistleblower programs that are currently administered
by other agencies or authorities. For instance, the SEC administers a
whistleblower program pursuant to Section 21F to the Securities
Exchange Act, and the CFTC administers a whistleblower award program
under Section 23 of the Commodity Exchange Act.\85\ The SEC and CFTC
whistleblower programs were established by the Dodd-Frank Act, enacted
in 2010. The Internal Revenue Service (IRS) also has a whistleblower
program, which was established by the Tax Relief and Health Care Act of
2006.\86\ The IRS's whistleblower program offers monetary rewards to
whistleblowers who voluntarily expose tax law violations.
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\85\ See generally SEC, Whistleblower Program, <a href="https://www.sec.gov/enforcement-litigation/whistleblower-program">https://www.sec.gov/enforcement-litigation/whistleblower-program</a>; CFTC,
Whistleblower Program, <a href="https://www.whistleblower.gov/">https://www.whistleblower.gov/</a>.
\86\ See generally IRS, Whistleblower Office, <a href="https://www.irs.gov/compliance/whistleblower-office">https://www.irs.gov/compliance/whistleblower-office</a>.
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Based on the information available to FinCEN's Office of the
Whistleblower, around twenty (20) percent of the initial whistleblower
tips received from 2021 through February 2025 are known to have also
been submitted to whistleblower programs administered by other federal
agencies, such as the SEC and CFTC.
2. Expected Economic Effects
In forming its expectation of the potential economic consequences
of the proposed rule, FinCEN assessed what it considered the most
likely anticipated changes to baseline expectations and activities of
the identified groups of potentially affected parties.
a. Expected Benefits
FinCEN expects that the Whistleblower Program, as proposed, would
lead to an increased submission of tips that will enhance the ability
of the affected federal departments and agencies to enforce the covered
statutes. Whistleblower information would benefit Treasury and DOJ when
it is sufficiently specific, credible, and timely to cause an
appropriate agency or authority to commence, open, or reopen an
examination or investigation, or inquire concerning different conduct
as part of a current examination or investigation.
In already pending investigations, whistleblower information would
benefit Treasury and DOJ when it significantly contributes to the
successful enforcement of the covered action or related action. In such
a case, whistleblower information would enable Treasury and/or DOJ to
collect monetary sanctions they may not have otherwise been able to
collect without further commitments of time and investigatory
resources. In addition, whistleblower information would be especially
valuable to Treasury and DOJ when it enables them to complete
investigations more quickly.
b. Expected Costs
Aside from changes to costs that flow directly from a change in
reporting or recordkeeping obligations,\87\ changes in cost may include
those due to a change in behavior in response to a change in incentives
introduced by a rule. Such changes in cost could be associated with
activities undertaken by a party directly or could change as the result
of activities taken by other parties that have an effect on the
affected party.
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\87\ Such costs are typically identified and accounted for under
the PRA analysis. See infra Section VI.E. (for the PRA analysis).
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i. Costs to Whistleblowers
Costs to whistleblowers include economic and financial costs. A
preliminary presentation of reporting costs is included in the
Paperwork Reduction Act (PRA) analysis below.
ii. Costs to Potential Subjects of Form TCR
To determine whether potential subjects of Form TCR will incur
economic costs associated with the proposed rule, FinCEN first examined
the regulatory baseline as it pertains to the companies that may be the
subjects of a Form TCR. FinCEN then assesses whether, in light of that
regulatory baseline, such companies would incur any incremental costs
as a result of the implementation of the proposed rule. If FinCEN
identifies such incremental costs, then it can estimate the
distribution of potentially affected companies by magnitude of the
anticipated incremental costs.
FinCEN assumes that the great majority of entities that may become
the subject of a Form TCR have policies, procedures, and controls in
place that ensure their compliance with the covered statutes. This may
in part result from the fact that, as described above, the status quo
already includes incentives for companies that may be the subject of a
Form TCR to take action to ensure they comply with the covered
statutes, including by reviewing their existing internal policies,
procedures, or controls and making any necessary or advisable revisions
or changes to those policies, procedures, or controls. As explained
above, these incentives include Treasury and DOJ's voluntary self-
disclosure policies, as well as currently operating federal
whistleblower programs. For example, FinCEN's Whistleblower Program is
already receiving tips, which it shares with the components of Treasury
and DOJ that enforce the covered statutes. In addition, DOJ has a fully
operational Criminal Division Corporate Whistleblower Awards Pilot
Program that offers financial awards for whistleblowers who report
violations of the covered statutes, among other laws.
Because such incentives already exist, and because their effect on
the activities of potential subjects of Form TCRs can already be
presumed to have taken place, FinCEN considers that the proposed rule
will only cause a small minority of potentially affected parties to
incur incremental costs specifically associated with the proposed rule.
Those costs may include: (i) one-time familiarization costs associated
with FinCEN's Whistleblower Program; (ii) review of internal policies,
procedures, and controls related to compliance with the covered
statutes; (iii) efforts to update such policies, procedures, and
[[Page 16355]]
controls as deemed necessary or prudent in light of the Whistleblower
Program; and (iv) capacity-building expenditures, such as the hiring of
additional personnel to support in-house programs to expedite review
and response to employee complaints reported internally. At this time,
FinCEN does not have sufficient data to estimate the distribution of
potentially affected businesses by magnitude of any anticipated novel
costs with any reliable precision. However, because these costs would
be incremental to the regulatory baseline and baseline of practices as
described above, FinCEN anticipates that the expected population of
actually affected subjects of Form TCR would be very small, and among
that subpopulation of affected parties the majority are unlikely to
undertake any new activities which would result in a material change in
expenditures. Thus, the economic costs of this proposal are not
expected to exceed $100 million, on average, annually.
iii. Costs to Government
To implement the rule, FinCEN expects to incur certain operating
costs that would include approximately $1.8 million in the first year
and approximately $1.6 million each year thereafter.\88\ These
estimates include anticipated novel expenses related to technological
implementation,\89\ stakeholder outreach, and informational support, as
well as certain incremental increases to pre-existing administrative
and logistical expenses. These estimates are generally consistent with
previous estimates provided by the Congressional Budget Office that
anticipated costs of approximately $1 million per operational year and
average direct spending of approximately $300,000 per year on program
development through the first two years of full operation.\90\
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\88\ This estimate is consistent with the combined cost of
development contract support plus internal staff labor at the GS-15
level in year 1, operations and management contract support plus
internal staff labor at the GS-15 level in year 2, and operations
and management contract support plus internal staff labor at the GS-
15 and GS-14 level in year 3.
\89\ Technological implementation for a new reporting form
contemplates expenses related to development, operations, and
maintenance of system infrastructure, including design, deployment,
and support.
\90\ U.S. House Committee on Financial Services. (2020).
Coordinating Oversight, Upgrading and Innovating Technology, and
Examiner Reform Act of 2019 (H. Rept. 116 245).
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While such operating costs, if offset by budget increases, need not
be considered part of the general economic cost of a rule, FinCEN
acknowledges that this treatment implicitly assumes that resources
commensurate with the novel operating costs would exist. If this
assumption does not hold, then operating costs associated with a rule
may impose certain economic costs on the public in the form of
opportunity costs from the agency's forgone alternative activities and
the foregone benefits of those activities. Putting that into the
context of this proposed rule, and benchmarking against FinCEN's actual
appropriated budget for fiscal year 2023 ($190.2 million),\91\ the
corresponding opportunity cost would resemble forgoing less than one
percent of current agency activities annually.
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\91\ FinCEN, Congressional Budget Justification and Annual
Performance Plan and Report FY 2025 (2024), <a href="https://home.treasury.gov/system/files/266/12.-FinCEN-FY-2025-CJ.pdf">https://home.treasury.gov/system/files/266/12.-FinCEN-FY-2025-CJ.pdf</a>.
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FinCEN notes that these estimates represent gross pro forma
accounting costs, and do not account for potential reductions in direct
costs engendered by certain anticipated efficiencies the proposed rule
might introduce. For example, in some cases, whistleblower information
might provide investigators with the type of analysis for which they
otherwise might have had to retain and pay an expert or, similarly,
with specific evidence of violations of the covered statutes that may
otherwise have been identifiable only after more time-consuming
research by investigators. Receiving such information from a
whistleblower would reduce government costs because instead of payment
to an expert before the outcome of an investigation is realized, or use
of investigative personnel resources in time-consuming research with an
uncertain outcome, Treasury or DOJ would instead only pay a
whistleblower for such insight if the analysis led to the successful
enforcement of a covered action. In such cases, payment would
effectively be funded by the monetary sanctions from the party that
engaged in wrongdoing, rather than being directly borne by the
government. Because it is unclear in all circumstances which federal
department or agency would otherwise incur the costs of retaining an
expert, no attempt has been made to net such costs out of the preceding
estimates of pro forma expected costs to FinCEN.
In addition, the proposed rule is not expected to introduce
significant, direct costs related to the payment of awards. Section
5323 of the BSA established a revolving fund--the ``Financial Integrity
Fund''--that is available to the Secretary, without further
appropriation or fiscal year limitations, for the payment of awards.
Generally, the Financial Integrity Fund is funded by the monetary
sanctions collected in connection with covered actions.\92\ As a
result, the costs associated with whistleblower awards for both covered
actions and related actions should be funded by the monies collected
from the covered actions that were successfully enforced as a result of
the corresponding whistleblower tips.\93\
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\92\ However, no amounts to be deposited or transferred into the
United States Victims of State Sponsored Terrorism Fund pursuant to
the Justice for United States Victims of State Sponsored Terrorism
Act (34 U.S.C. 20144) or the Crime Victims Fund pursuant section
1402 of the Victims of Crime Act of 1984 (34 U.S.C. 20101) shall be
deposited into or credited to the Financial Integrity Fund. See 31
U.S.C. 5323(b)(4)(C).
\93\ See generally 31 U.S.C. 5323(b)(3)-(5).
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3. Economic Consideration of Policy Alternatives
With a view toward its potential statutory obligations,\94\ FinCEN
considered a number of policy alternatives to the Whistleblower Program
as proposed. The policy consideration of alternatives is incorporated
by discussion in the section-by-section analysis, where these
considerations reflect discretion exercised in statutory implementation
with respect to programmatic definitions,\95\ structure, and
operations. The discussion below is limited to economic consideration
of alternatives to the format and submission mechanism for the forms
associated with the rulemaking (Form TCR and Form WB-APP) as proposed,
which we consider to be the most viable alternatives to FinCEN's
proposal from an economic perspective.
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\94\ A consideration and explanatory discussion of policy
alternatives is expressly required by both the RFA (absent
certification. See infra Section VI.C. (and the UMRA) (when
expenditures are expected to exceed the inflation-adjusted statutory
threshold); see infra Section VI.D.
\95\ See supra Section III (for descriptions of applicable
programmatic definitions for the Whistleblower Program).
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a. Status Quo
Currently, FinCEN does not prescribe a form or method for
submission of information, and whistleblowers often initially submit
information in an emailed or similar free-form written submission.
FinCEN considered whether to continue to allow whistleblowers to submit
email or other free-form submissions and concluded that using a
standardized electronically submitted form, for a number of reasons,
would improve the balance of expected benefits to costs. First, the
standardized, electronically submitted form is expected to improve the
reporting experience for whistleblowers. A standardized form may save
them time when initially submitting information to
[[Page 16356]]
FinCEN because it would allow them to rely on a reporting format that
has already been developed, thereby obviating that need to
independently determine how best to structure the information they wish
to report. The standardized form would also enable whistleblowers to
clearly communicate the specific types of information most useful to
government personnel making an initial determination about whether to
pursue a lead, because the form was developed with those personnel's
input. Second, the proposed standardized, electronically submitted form
is expected to enhance efficiency in processing the Form TCRs received.
FinCEN anticipates that structured electronic submissions will make it
more efficient for personnel to record, review and analyze incoming
whistleblower information.
b. Paper or Printable Forms
FinCEN also considered whether to provide printable versions of
Form TCR and Form WB-APP and allow whistleblowers to send paper
submissions by U.S. mail or commercial carrier to FinCEN's offices but
determined it would strike a better balance of anticipated benefits to
costs to require submissions to be made using an online portal, as
proposed. Using an online portal to file Forms TCR and Forms WB-APP
electronically is expected to more easily facilitate the transmission
of whistleblower information, which is especially important when
whistleblower information is time-sensitive in nature. Using an online
portal specific to the submission of these forms also provides a direct
and secure means for sensitive information to be delivered to FinCEN.
This is especially important when whistleblower information relates to
national security. Additionally, using such an online portal is
expected to be a more efficient method to receive whistleblower
information and store it in FinCEN databases because it would eliminate
the costs of manually re-entering whistleblower information into
FinCEN's databases and would reduce the probability of transcription
error.
c. Unstructured Submissions via Web Page Interface
FinCEN considered an alternative to its proposed rule that--while
nevertheless requiring the electronic submission of Form TCR and Form
WB-APP information via an online interface--submissions might be made
through a simple, dedicated web page that would be similar to the
current free-form approach by allowing users to input select fields of
contact information as desired and either input the tip information
they desired to report directly into a free form textbox or upload the
prepared information as either a document or PDF. This alternative
could potentially have the advantage of being less burdensome for
certain whistleblowers with information that is relatively
uncomplicated to document and can be communicated without the need for
further clarification or supplementation. FinCEN, however, considered
that there may be more instances where the lack of structure and
tractability of submissions via textbox or uploaded file might impose
greater burdens on both those submitting whistleblower information and
those receiving and further processing it, because of the likely need
to subsequently apply some uniform structure to the various forms and
formats in which the information was originally received. The lack of
structure imposed on the reported information might also lead to lost
value in cases where whistleblowers believe they have provided
sufficient contact information to receive necessary follow-up
communications, but in fact have not, or have input erroneous contact
information (such as by simple typographical error) with insufficient
alternatives to enable the further contact needed to make their tips
actionable. It could also introduce greater private costs if a
whistleblower, who might otherwise be fully capable of reporting the
required information by completing the applicable form independently,
is unsure of his or her own ability and opts to retain an attorney in a
situation where the benefit of that assistance is not commensurate with
its cost.
B. E.O.s 12866 and 13563
E.O.s 12866 and 13563 direct agencies to assess costs and benefits
of available regulatory alternatives and, if regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic environmental, public health and safety effects,
distributive impacts, and equity). E.O. 13563 emphasizes the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. FinCEN's assessment in
Section VI.A. describes why it would be unable to identify an average
annual effect on the economy of $100 million or more that could be
solely attributed to the proposed Whistleblower Program in any given
year of the foreseeable future. This is consistent with OMB's
determination that the rule does not constitute a ``significant
regulatory action'' under section 3(f)(1) of E.O. 12866.
Given FinCEN's preliminary conclusion about the expected
significance of the proposed rule, a more exhaustive regulatory impact
analysis is not required pursuant to E.O.s 12866 and 13563.
Nevertheless, FinCEN has provided the foregoing discussion of economic
considerations with a view to providing the public with adequate
insight into the analysis that informed the rule as proposed, including
key assumptions about: how potentially affected parties would behave in
the absence of the proposed rule; the burden associated with activities
newly undertaken as a consequence of the proposed rule; and how
expected costs may be distributed across the categories of potentially
affected parties. Because these form the basis of FinCEN's estimates of
the expected burden and net benefits of the proposed rule, the extent
to which they may be improved by more accurate, detailed, or complete
data (either quantitative or qualitative) would depend on the feedback
of relevant market participants, including currently affected parties
and potential future affected parties. Accordingly, public review and
response to the additional, regulatory assessment-focused requests for
comment included below are invited.\96\
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\96\ See supra Section IV. (for request for comments on the
proposed rule); see also infra Section VI.F. (for request for
comments applicable to the regulatory analysis).
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C. Regulatory Flexibility Act (RFA)
When an agency issues a notice of proposed rulemaking, the RFA \97\
requires the agency either to provide an initial regulatory flexibility
analysis (IRFA) with the proposed rule or certify that the proposed
rule would not have a significant economic impact on a substantial
number of small entities.\98\ FinCEN certifies that the proposed rule
is not expected to have a significant economic impact on a substantial
number of small entities. The basis for this expectation is discussed
in further detail below.
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\97\ 5 U.S.C. 601 et seq.
\98\ Small entities as defined in 5 U.S.C. 601(6) include any
``small business'' (as defined in 601(3)), ``small organization''
(as defined in 601(4)), or ``small governmental jurisdiction'' (as
defined in 601(5)).
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As a threshold matter, the RFA does not apply to two of the three
identified categories of parties expected to be affected by the
rule.\99\ As discussed above, FinCEN anticipates the proposed rule to
affect: (i) whistleblowers; (ii)
[[Page 16357]]
entities that may become the subject of a whistleblower's Form TCR
submission; and (iii) the federal government departments and agencies
that would receive information from the Form TCR submitted (primarily
Treasury and DOJ). Because whistleblowers must be individuals, or
groups of individuals, acting in their respective capacities as natural
persons, they do not fall under any of the three categories of small
entity to which the RFA applies. Similarly, the departments and
agencies that comprise the third group of expected affected parties are
also not covered entities under the RFA.
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\99\ See supra Section VI.A.1.a. (for baseline of affected
parties).
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The group of potentially affected parties to whom RFA
considerations apply is the population of potential subjects of Form
TCR. Table 5 and Table 6 present FinCEN's estimates of the proportion
of each potentially affected financial institution type or industrial
category that would meet the respective criterion of ``small'' as
defined in 13 CFR 121.201, or as otherwise defined for purposes of the
RFA. These tables are estimated over the same baseline populations
presented in Table 1 and Table 2 above, respectively, and are subject
to the same caveats about representativeness, completeness, and limits
to count de-duplication.
B
[…truncated; see source link]Indexed from Federal Register on April 1, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.