FinCEN requested tips related to the following:
Fraud
Money laundering
Violations of international sanctions
FinCEN also began offering financial incentives for whistleblower tips deemed eligible, along with protections against possible retaliation. Eligibility is defined as information that results in a successful enforcement action by the Treasury Department or the Department of Justice (DOJ) leading to monetary penalties in excess of $1 million, and that meets the requirements outlined in Statute 31. U.S.C. 5323.
Qualified whistleblowers may be eligible for awards ranging from 10 percent to 30 percent of the monetary sanctions collected when enforcement actions result in penalties exceeding $1 million.
The stated goal of this initiative is to shut down fraud rings and recover laundered or misused funds. FinCEN hopes that by encouraging individuals with knowledge of fraudulent activity to come forward, they can expand the government’s investigative reach.
You may be wondering how to identify conduct that could qualify as criminal tax fraud or another reportable violation. Our free ebook, "Will I Be Charged with Criminal Tax Fraud?," provides background information on these issues. However, here is one possible scenario:
Money Service Businesses (MSBs) provide services similar to banks but are not official financial institutions. They are permitted to facilitate money transfers, exchange currency, check cashing, and the sale of money orders and traveler’s checks. Some MSBs also handle cryptocurrency transactions. These businesses are regulated by the Bank Secrecy Act, which governs licensing and reporting obligations.
An example of potential MSB fraud involves the failure to file the required Currency Transaction Reports (CTRs) for cash transactions exceeding the $10,000 reporting threshold. A pattern of deliberate non-filing may indicate money laundering, sanctions evasion, structuring, or other forms of financial fraud. Such conduct may involve routing illicit proceeds overseas, using shell companies to clean or disguise funds, or transferring money to sanctioned nations or entities abroad.
Employees who knowingly assist in concealing suspicious transactions may also face scrutiny alongside business owners and managers. Patterns involving repeated large transactions by the same customers, particularly when combined with instructions to ignore reporting obligations, can increase regulatory and criminal risk.
Employees may be concerned about job loss or retaliation when reporting suspicious activity. At the same time, individuals who were aware of suspicious activities and continued to assist by failing to file required reports may face scrutiny alongside owners, managers, and other employees if the IRS targets the business. In such circumstances, the whistleblower protections available through FinCEN are designed to provide statutory safeguards, including the possibility of a financial reward.
If allegations involve reporting failures, suspicious transactions or potential violations of federal financial laws, experienced legal guidance can help clarify exposure and next steps. At Robert J. Fedor, Esq., L.L.C., we advise business owners and employees facing IRS and FinCEN-related enforcement concerns. Contact 440-250-9709 to schedule a consultation. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.