FinCEN Proposes Rule to Increase Whistleblower Incentives

April 17, 2026

FinCEN Proposes Rule to Increase Whistleblower Incentives

Kelly McGlynn Ballard Spahr LLP + Follow Contact LinkedIn Facebook X ;) Embed

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FinCEN has published a Notice of Proposed Rulemaking (“NPRM”) that would formalize and expand its whistleblower program, offering potentially substantial financial payouts to whistleblowers reporting certain financial crimes. According to FinCEN’s announcement, this initiative is designed to incentivize and protect individuals who report violations of major financial crime laws—specifically, the Bank Secrecy Act (“BSA”), the International Emergency Economic Powers Act (“IEEPA”), the Trading With the Enemy Act (“TWEA”), and the Foreign Narcotics Kingpin Designation Act (the “Kingpin Act”). Treasury Secretary Scott Bessent has said that through this rule, “Treasury will reward whistleblowers who provide timely, actionable information on fraud, sanctions violations, and other significant illicit finance activity[.]”Under the proposed rule, whistleblowers could be entitled to 10-30 percent of monetary penalties the government collects as a result of whistleblower tips.

The NPRM, which notably requires a 120-day waiting period for whistleblowers involved in certain fiduciary and compliance functions, highlights the importance of investing in robust compliance programs. It signals heightened enforcement interest in financial crimes, and advertises weighty incentives to motivate potential whistleblowers.

Overview and Legal Authority

FinCEN cites to the BSA, as strengthened by the Anti-Money Laundering Act of 2022 and the Anti-Money Laundering Whistleblower Improvement Act of 2022 (codified at 31 U.S.C. § 5323), for its authority to implement the proposed rule. The relevant statutory provision states:

In any covered judicial or administrative action, or related action, the Secretary, under regulations prescribed by the Secretary, in consultation with the Attorney General and subject to subsection (c), shall pay an award or awards to 1 or more whistleblowers who voluntarily provided original information to the employer of the individual, the Secretary, or the Attorney General, as applicable, that led to the successful enforcement of the covered judicial or administrative action, or related action, in an aggregate amount equal to—

(A) not less than 10 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions; and

(B) not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions.

FinCEN established an Office of the Whistleblower, which began receiving whistleblower tips in 2021. This proposed rule would formalize and significantly enhance this program. The proposed rule:

• Defines key terms, such as “covered action”, “original information”, “voluntary submission”, “monetary sanctions”, and “related action;”
• Provides for submission through a standardized, secure online form;
• Outlines requirements to apply for an award;
• Sets forth eligibility criteria for awards and the process for adjudicating award applications;
• Details confidentiality and anti-retaliation protections; and
• Implements a system for appealing adverse determinations, and for barring bad-faith or abuse of the whistleblowing program. Eligibility Requirements for Whistleblower Award

The rule details four requirements for a whistleblower to be eligible for an award: (1) voluntary submission of original information; (2) the whistleblower is the original source of the original information; (3) the original information led to the successful enforcement of a covered action or related action; and (4) the whistleblower provides certain additional information to Treasury and DOJ upon request.

One key function of the proposed rule is to thoroughly define what qualifies as “original information.” It identifies four elements that must be met for FinCEN to find that a whistleblower provided qualified original information. These elements are:

• The information must be “derived from the independent knowledge or independent analysis of [the] whistleblower.” In the NPRM, FinCEN explains that independent knowledge does not require the whistleblower to have direct, first-hand knowledge of potential violations. Rather, their knowledge must be obtained from their own experiences, observations, or communications, and not from public sources. On the other hand, independent analysis may be based on information that is generally available or known, as long as the analysis “results in material insights” that are not generally known or available to the public.
• The information is not already known to Treasury or DOJ.
• The information is not exclusively derived from an allegation made in a publicly available source, including judicial or administrative hearings.
• The information is provided to Treasury or DOJ after the enactment of the statutes that established the Whistleblower Program and amended its scope (January 1, 2021 for violations of the BSA, and December 29, 2022 for violations of the IEEPA, TWEA, and the Kingpin Act). Equally important is the proposed rule’s definition of voluntariness. In the proposed rule, FinCEN explains that a submission is voluntary if it is made before the whistleblower receives any request for information about the subject matter. Thus even an informal request for information would negate the voluntariness requirement.

The proposed rule also defines “covered action” as “an administrative or judicial action taken by Treasury or DOJ under certain ‘covered statutes’ … the BSA, IEEPA, TWEA, and the Kingpin Act” where monetary sanctions exceed $1,000,000. Notably, the proposed rule grants FinCEN the discretion to treat multiple actions as a single “covered action” if they arise out of substantially the same facts, such that those actions could collectively exceed the $1,000,000 threshold.

Through these regulatory definitions, FinCEN seeks to establish clear standards for the circumstances under which a whistleblower may be entitled to an award, as well as situations in which a whistleblower may be excluded from participation.

One key limitation FinCEN proposes is a 120-day waiting period for whistleblowers involved in fiduciary or compliance roles within an entity. The proposed rule would prevent whistleblowers from receiving an award where their position in certain key roles within an entity—such as serving as a director or trustee, participating in internal compliance processes, or serving as an employee or outside contractor with duties involving audit or compliance responsibilities—is the reason the whistleblower obtained the potentially reportable information, and they report the information within 120 days of learning it. According to FinCEN’s announcement, this waiting period seeks to provide entities an opportunity to address issues or voluntarily disclose information to the government, and to avoid incentives for whistleblowers to undermine effective compliance programs.

Implications

Through this proposed rule, FinCEN clearly seeks to signal renewed, enhanced enforcement of financial crimes, and incentivize whistleblowers to come forward.

In addition to spelling out eligibility criteria, which in theory lessens the uncertainty potential whistleblowers may feel about their opportunity to gain from acting as a whistleblower, the proposed rule contains numerous provisions detailing procedural and operational implementation of the program. These provisions, which, for example, identify a secure portal for submitting information, detail the process for submitting and adjudicating award applications, and spell out confidentiality and anti-retaliation protections, seek to provide even further comfort for potential whistleblowers and establish a robust program for soliciting and processing tips.

FinCEN is accordingly projecting a substantial increase in the number of whistleblower tips it receives, estimating that it will receive approximately 250 original submissions and 150 supplemental submissions annually within three years of the rule’s effective date. This is a dramatic increase from the approximately 90 submissions it received per year between 2021 and 2024.

As the rule is not yet final (it is subject to a 60-day notice and comment period), some of the details may change. Nonetheless, the proposed framework provides substantial insight into the direction FinCEN is moving, and suggests is quite possible that there will be a notable increase in whistleblower activity following the rule’s implementation.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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