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The importance of whistleblowers in exposing financial crime

Whistleblowers are the unsung heroes in the fight against financial crime, shining a light on illicit activities and holding wrongdoers accountable.

Mariya Pattara
April 27, 2023

Behind every ground-breaking revelation and scandal-shaking exposé, there's often a courageous whistleblower who dared to speak up. From government corruption to corporate money laundering scandals, these brave individuals are the first to raise the alarm. They often risk their careers, reputations, and even their personal safety to expose wrongdoing, and their actions have led to some of the most significant reforms and changes in history. They help fight against financial crime in a number of ways:

Exposing illegal activity

Whistleblowers are often the first to spot suspicious activity within their organisation. They may notice that certain transactions are not properly documented or that their employer is engaging in unethical behaviour. By reporting these activities, they can help to expose and eradicate illegal activity.

Providing evidence

Whistleblowers can provide crucial evidence that can be used to investigate financial crimes and money laundering. They may have access to documents or other evidence that can help law enforcement build a case against those involved in criminal activity. Evidence is vital for enforcement action to be taken.  

Protecting the public interest

Whistleblowers play a critical role in protecting the public interest, reporting on illegal activity which can harm consumers and investors, and on financial crimes and money laundering, which have a severely detrimental effect on society as a whole. By reporting illegal or unethical behaviour, whistleblowers help to ensure that organisations are held responsible for their actions and that they take steps to prevent similar behaviour in the future.

Protecting the protectors:  What support is provided

Whistleblowers often risk retaliation from their employers, colleagues, or even the government.  This can take the form of job loss, demotion, harassment, or even legal action. It’s therefore essential to have a system in place to support and protect whistleblowers by establishing clear procedures that maintain confidentiality, provide incentives, and offer legal and emotional assistance. There are several organisations, such as the Government Accountability Project, which empower whistleblowers with legislative initiatives, litigation assistance, and educational outreach.

Monetary rewards for whistleblowing are typically offered by government agencies or regulatory bodies. The value of the reward varies depends on the severity of the wrongdoing and the significance of the information provided. In the US, the US Securities and Exchange Commission typically awards 10-30% of the money collected in any subsequent enforcement action. The recent passing of the AML Whistleblower Improvement Act revises the management of whistleblower incentive awards to include a minimum reward and enhanced protection. The UK Government provides support and guidance to whistleblowers as listed here.  

The fight against financial crime and money laundering has never been more critical. We need whistleblowers who are brave enough to speak out against corrupt practices, as well as strong enforcement communities that can hold financial institutions accountable. Without these critical components, the fight against financial crime and money laundering will be an uphill battle, leaving our economies and communities vulnerable to the devastating effects of illicit financial activities.  

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Photo by Pawel Czerwinski on Unsplash

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