What violations can a whistleblower report under the Bank Secrecy Act?

The Bank Secrecy Act (BSA) allows whistleblowers to report violations of the BSA, the International Emergency Economic Powers Act, the Foreign Narcotics Kingpin Designation Act, and certain provisions of the Trading with the Enemy Act. Such violations generally relate to the occurrence of prohibited transactions and financial entities’ failures to detect and report such transactions.

The BSA requires financial institutions to maintain effective antimoney-laundering (AML) programs and report certain transactions to the Financial Crimes Enforcement Network, or “FinCEN.” Financial institution’s AML programs must take reasonable steps to ensure that their facilities are not used for money laundering. These steps include designating a compliance officer, formulating a written program to detect signs of money laundering, training employees, and auditing the program to test its performance.

A financial institution must also report different types of transactions. Because criminal enterprises often deal in cash, the BSA requires financial institutions to report all currency transactions that exceed a certain amount. Financial institutions must also report potentially suspicious transactions. Transactions qualify as suspicious if they appear designed to evade the currency reporting requirement, may involve proceeds of illegal activity, or have no apparent business or lawful purpose based on available information.

Past enforcement actions under the BSA show that AML failures frequently cause reporting violations. In 2018, the government imposed $528 million in penalties on a bank for employing too few AML personnel and limiting the number of potentially suspicious transactions it would review each month. The bank’s failure to devote adequate resources to its AML program caused it to miss around 2,000 suspicious activity reports on transactions collectively worth $700 million.

The other statutes covered by the BSA’s whistleblower program relate to international monetary sanctions. The statutes authorize the President or his delegate to block economic activity with entities and individuals designated as threats to national security or other important interests. Sanctioned parties include hostile foreign nations and their proxies, terrorist organizations, drug traffickers, and others. Conducting economic activity with a sanctioned individual or entity can result in imprisonment, criminal fines, and civil penalties.

In 2019, the government required a European bank to forfeit $240 million and pay a $480 million fine for allegedly processing 9,500 transactions through the U.S. financial system on behalf of the Iranian government. According to prosecutors, bank employees helped Iranian customers set up companies to create the appearance that the transactions originated from other countries.

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