CM Law Partner Mike Piazza breaks down FinCEN’s new whistleblower program, offering financial rewards for tips on fraud, money laundering, and sanctions violations—and what it means for your organization’s compliance strategy in this client alert.
Overview
On February 13, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced the launch of a new dedicated webpage to confidentially accept whistleblower tips on fraud, money laundering, and sanctions violations. This initiative signals a significant expansion of the federal government’s enforcement toolkit and carries important implications for financial institutions, corporations, and individuals engaged in activities touching the U.S. financial system.
Key Details of the Program
Treasury Secretary Scott Bessent announced that the Department will provide financial rewards for eligible whistleblower tips. Individuals who provide information may be eligible for awards if their tip leads to a successful enforcement action. FinCEN’s Office of the Whistleblower is accepting tips involving violations and conspiracies related to the Bank Secrecy Act, U.S. sanctions programs, and several other laws critical to safeguarding the U.S. financial system and national security.
Secretary Bessent emphasized the Administration’s commitment to this initiative, stating: “We are going to offer whistleblower payments to anyone who wants to tell us the who, what, when, where, and how this fraud and money laundering has occurred”. FinCEN encourages whistleblowers to submit information as soon as possible and to provide detailed, specific documentation to support their claims.
Broader Enforcement Context
The new whistleblower program is part of a broader series of Treasury initiatives announced to combat financial crimes. These additional measures include investigating Money Services Businesses, enhancing reporting to accelerate prosecutions and recover laundered funds, alerting financial institutions to help disrupt fraud rings exploiting child nutrition programs, and training law enforcement to better leverage financial data to combat complex fraud schemes. In addition, the IRS will launch a dedicated fraud task force focused on targeting the misuse of funding by 501(c)(3) tax-exempt entities.
The Expanding Federal Whistleblower Landscape
The FinCEN whistleblower program joins a well-established and growing network of federal whistleblower initiatives that have proven highly effective in detecting and prosecuting corporate misconduct. The Securities and Exchange Commission (SEC) Whistleblower Program, created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, has become one of the most successful enforcement tools in the securities realm, awarding eligible whistleblowers between 10 and 30 percent of monetary sanctions exceeding $1 million collected in successful enforcement actions. Since its inception, the SEC program has paid out billions of dollars in awards and generated enforcement actions recovering significantly more. Similarly, the Commodity Futures Trading Commission (CFTC) operates a parallel whistleblower program covering violations of the Commodity Exchange Act, offering the same 10 to 30 percent award range for sanctions over $1 million in actions involving commodities and derivatives fraud, manipulation, and other misconduct.
More recently, the Department of Justice (DOJ) launched its Corporate Whistleblower Awards Pilot Program in August 2024, designed to fill gaps left by the SEC and CFTC programs by targeting violations involving financial institutions, foreign corruption and bribery, and domestic corruption involving government contracts and programs. The DOJ program similarly offers awards of up to 30 percent of forfeited proceeds exceeding $1 million. The new FinCEN initiative further expands this enforcement architecture by focusing specifically on Bank Secrecy Act violations, sanctions evasion, and money laundering-areas of increasing priority for the federal government. Taken together, these programs create a comprehensive web of whistleblower incentives that cover virtually every major category of financial and corporate misconduct, significantly increasing the likelihood that wrongdoing will be detected and reported. Companies should assume that employees, counterparties, and other individuals with knowledge of potential violations now have strong financial incentives to report to federal authorities across multiple agencies.
Implications for Clients
This announcement underscores the heightened risk environment for organizations operating in sectors susceptible to fraud, money laundering, or sanctions exposure. Companies should consider taking the following steps in light of this development:
Specific Compliance Risk Areas
Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) Risks. Financial institutions and other covered entities face significant exposure under the new whistleblower program for deficiencies in their AML and BSA compliance frameworks. Key vulnerability areas include inadequate customer due diligence and Know Your Customer (KYC) procedures, deficient transaction monitoring systems that fail to detect or escalate suspicious activity, insufficient suspicious activity report (SAR) filing practices, weak oversight of correspondent banking relationships, and gaps in beneficial ownership identification. Money Services Businesses (MSBs) face particular scrutiny, as the Treasury announcement specifically noted investigations targeting this sector. Organizations should conduct comprehensive assessments of their AML/BSA programs to identify and remediate gaps before they become the subject of whistleblower reports.
Sanctions Compliance Risks. Sanctions evasion is a primary focus of the FinCEN whistleblower program, creating heightened risk for organizations with international operations or exposure to high-risk jurisdictions. Vulnerable areas include weaknesses in OFAC compliance programs, inadequate screening of customers, vendors, and counterparties against sanctions lists, trade finance transactions with sanctioned jurisdictions, cryptocurrency and virtual asset sanctions exposure, and indirect dealings with sanctioned parties through intermediaries or front companies. Organizations should review their sanctions screening protocols and ensure they have robust systems to detect and prevent sanctions violations across all business lines and geographies.
Internal Reporting Mechanism Deficiencies. The availability of substantial financial rewards through federal whistleblower programs creates a structural challenge for internal compliance functions. Employees and other individuals with knowledge of potential violations may now have greater incentive to report externally rather than through internal channels. Organizations should evaluate whether their internal reporting mechanisms suffer from common weaknesses, including lack of true anonymity protections for reporters, absence of financial or other meaningful incentives for internal reporting, fear of retaliation that discourages internal escalation, slow or non-responsive internal investigation processes, insufficient feedback to reporters on investigation outcomes, and inadequate protections and recognition for those who raise concerns internally. To compete with the financial incentives offered by federal programs, organizations must make internal reporting channels demonstrably safe, responsive, and effective.
Risks for Specific Entity Types
Financial Institutions. Banks, credit unions, broker-dealers, insurance companies, and other financial institutions face the most direct exposure under the FinCEN whistleblower program given their core AML, BSA, and sanctions compliance obligations. These entities should prioritize comprehensive compliance program assessments, enhanced training for front-line staff on identifying and escalating red flags, upgraded transaction monitoring and alert systems, rigorous record-keeping to demonstrate compliance efforts, and elevated compliance reporting to boards and audit committees. Financial institutions should also remain alert to Treasury guidance regarding specific fraud schemes, including those targeting government benefits programs such as child nutrition programs.
501(c)(3) Tax-Exempt Organizations. The announcement of a dedicated IRS fraud task force focused on misuse of funding by 501(c)(3) entities signals heightened enforcement attention for the nonprofit sector. Tax-exempt organizations should pay particular attention to governance vulnerabilities, including inadequate board oversight and fiduciary controls, use-of-funds issues such as expenditures inconsistent with charitable purposes, private inurement to insiders or excessive compensation arrangements, political activity that exceeds permissible limits, unrelated business income that is not properly reported or taxed, and weak internal controls over financial management. Nonprofit boards should consider conducting governance audits and implementing enhanced controls over charitable expenditures to mitigate whistleblower risk.
Corporations with Government Contracts or International Operations. The DOJ Corporate Whistleblower Awards Pilot Program and FinCEN initiative together create significant exposure for corporations outside the traditional financial services sector. Companies with government contracts face risk from the DOJ program’s focus on domestic corruption involving government programs. Organizations with international operations should be attentive to foreign corruption and bribery exposure under the DOJ program, as well as sanctions and money laundering risks under the FinCEN program that may arise from dealings with foreign counterparties, supply chain relationships, or operations in high-risk jurisdictions.
Recommended Operational and Governance Practices
In response to this significantly expanded whistleblower enforcement landscape, organizations should consider implementing or strengthening the following operational and governance practices:
Compliance Program Enhancements. Organizations should invest in upgrading compliance infrastructure, including AML, sanctions, and BSA programs for covered entities. This includes implementing risk-based compliance frameworks tailored to the organization’s specific risk profile, conducting regular independent assessments of compliance program effectiveness, enhancing employee training on identifying red flags and reporting obligations, and ensuring adequate staffing and resources for compliance functions.
Internal Reporting and Whistleblower Policies. Organizations should review and enhance internal reporting mechanisms to encourage employees to raise concerns internally before reporting to federal authorities. Key elements include establishing anonymous reporting channels such as hotlines or web-based portals, implementing robust anti-retaliation policies with meaningful enforcement, ensuring prompt and thorough investigation of all reported concerns, providing feedback to reporters on investigation outcomes where appropriate, and considering incentive programs that reward employees for good-faith internal reporting.
Governance Oversight. Boards of directors and audit committees should elevate compliance oversight in response to the expanded whistleblower landscape. This includes receiving regular reports on compliance program status and any internal reports of potential violations, ensuring that management has allocated adequate resources to compliance functions, overseeing the organization’s whistleblower and anti-retaliation policies, and conducting periodic enterprise-wide risk assessments that account for whistleblower exposure.
Documentation and Record-Keeping. Given that whistleblower reports may trigger regulatory inquiries or investigations, organizations should maintain rigorous documentation of their compliance efforts. This includes documenting compliance program policies and procedures, maintaining records of employee training and certifications, preserving documentation of internal investigations and their outcomes, and retaining evidence of remedial actions taken in response to identified issues. Such documentation can demonstrate good faith compliance efforts and may be relevant in any subsequent enforcement proceedings.
Next Steps
CM Law will continue to monitor developments related to this program and the broader enforcement initiatives announced by Treasury and other Federal agencies and Departments. And one thing all clients should consider immediately is undertaking a current risk assessment to identify any vulnerabilities or potential areas of enhancement to existing compliance programs. We are well positioned and have deep experience to assist clients with these assessments, and look forward to working with you to strengthen ongoing compliance efforts.
CM Law (cm.law) – formerly Culhane Meadows – is the largest national, full-service, women-owned & managed (WBE) law firm in the United States. Designed to provide experienced attorneys with an optimal way to practice sophisticated law while maintaining a superior work/life balance, the firm offers fully remote work options, a transparent, merit and math-based compensation structure, and a collaborative culture. Serving a diverse clientele—from individuals and small businesses to over 40 Fortune-ranked companies—CM Law is committed to delivering exceptional legal services across a broad spectrum of industries.
The foregoing content is for informational purposes only and should not be relied upon as legal advice. Federal, state, and local laws can change rapidly and, therefore, this content may become obsolete or outdated. Please consult with an attorney of your choice to ensure you obtain the most current and accurate counsel about your particular situation.
