Reported by: SABRINA WILLMER

A US law passed after Russia invaded Ukraine has given a boost to a flawed Treasury Department program that lawyers claimed deterred whistleblowers from providing tips on the role of banks in sanctions and anti-money laundering violations. 

As a result, Treasury’s Financial Crimes Enforcement Network, or FinCEN, has gotten more than 100 whistleblower submissions over a three-week period this year, according to people familiar with the matter. The agency fielded just 100 tips in the program’s first two years and made no payments to whistleblowers.

Under the law enacted Dec. 29, whistleblowers can report violations of economic sanctions like those imposed on Russian oligarchs to FinCEN. Tipsters whose information leads to financial recoveries will now get minimum payments, replacing a system with no guaranteed awards. 

Vladimir Putin

Photographer: Alexei Druzhinin/AFP/Getty Images

The new law is enticing informants to provide information on a variety of misdeeds, including how banks secretly help Russian President Vladimir Putin conduct his war in Ukraine.

“It is going to hit Putin and his cohorts where it hurts,” said attorney Stephen Kohn.

Kohn represents two whistleblowers outside the US who claim a bank caters to sanctioned Russian oligarchs and entities and may have failed to flag suspicious flows of Russian money through the US, according to a redacted complaint filed with regulators. The Washington lawyer wouldn’t identify the bank or his clients, citing concerns about retaliation. 

The FinCEN changes come as the Justice Department’s “KleptoCapture” task force hunts for yachts, private jets and hidden cash tied to sanctioned Russians. At first, the program only focused on violations of the Bank Secrecy Act, the anti-money laundering law that requires financial institutions to know their customers, report suspicious activities to FinCEN, and monitor high-risk transactions.

Read more: Russian Oligarchs Running Out of Hiding Places for Jets, Yachts

President Joe Biden signed the Anti-Money Laundering Whistleblower Improvement Act as part of the $1.7 trillion funding bill. Poppy Alexander, a lawyer specializing in whistleblower cases, said she previously turned away potential clients with information on sanctions violations, including the flow of tainted Russian money through banks. Now, she’s expecting some of those tipsters to return. 

“The potential global impact of this law is gigantic,” said Alexander.

Read full report: https://news.bloomberglaw.com/securities-law/banks-with-russia-ties-targeted-by-us-treasury-whistleblowers