The Missing Whistleblower: Who Will Tell the FMU?

In August 2024 the United States Department of Justice unveiled a corporate whistleblower awards pilot programme, under which an individual who brings original information about corporate crime, including crimes committed through financial institutions, may be paid a share of the resulting forfeiture; and this pilot was not an innovation but a layer, laid over the whistleblower provisions of the American Anti-Money Laundering Act of 2020, which promise an informant up to thirty per cent of monetary sanctions exceeding one million US Dollars, and which Congress strengthened again in December 2022 with minimum awards and coverage of sanctions evasion. Peter D. Hardy, whose "Money Laundering Watch" blog chronicled each of these steps between 19th January 2021 and 12th August 2024, described a system being deliberately engineered so that the employee who knows where the bodies are buried has a reason to speak and a shield when he does.

The engineering rests on a simple observation: laundering is concealed by professionals, recorded in systems ordinary investigators never see, and known intimately to a small number of insiders; therefore the cheapest detection tool any state possesses is an insider with an incentive.

Pakistan has understood this for revenue, and nowhere else. Section 227B of the Income Tax Ordinance, 2001 (Ordinance XLIX of 2001) provides a reward to whistleblowers who bring information of tax evasion, and the Federal Board of Revenue has framed the Inland Revenue Reward Rules, 2021 under Sections 227A and 227B to distribute rewards to informers and to officers upon recovery; Khyber Pakhtunkhwa enacted the Khyber Pakhtunkhwa Whistleblower Protection and Vigilance Commission Act, 2016, the first statute of its kind in the country; and Balochistan followed with its own Whistleblower Protection and Vigilance Commission Act in 2025. At the federal level, however, a Bill to establish a "Whistleblower Protection and Vigilance Commission" was introduced in the National Assembly in 2019 and never became law, a failure which Transparency International Pakistan was still protesting in June 2024, despite the fact that Pakistan ratified the United Nations Convention against Corruption in 2007 and thereby accepted, under Articles 8 and 13 of that Convention, the obligation to protect those who report corruption in good faith.

The Anti-Money Laundering Act, 2010 (Act VII of 2010) contains no whistleblower provision at all.

Consider what that omission costs. The Financial Monitoring Unit ("FMU") received 24,107 "Suspicious Transaction Reports" in 2022, and every one of them was filed by an institution: 4,901 by banks and 824 by exchange companies in the last quarter of that year alone (FMU, Quarterly Report, October to December 2022). An institutional report is a compliance product; it is generated by software thresholds and review committees, and it reports the customer, never the institution. The banker who is instructed to look away, the compliance officer whose escalation is buried, the accountant who prepares the second set of books, the housing society clerk who registers the fifteenth file in a peon's name: none of these people has any statutory reason to approach the FMU, and every reason of livelihood not to, since the Act that criminalises the laundering offers them neither reward nor protection from the employer they would be reporting. Since the APG's Mutual Evaluation Report of October 2019 scored Pakistan at three per cent for effectiveness while four follow-up reports raised technical compliance to seventy-two per cent by August 2022, therefore the deficit in our regime is not the writing of rules but the discovery of facts; and facts are what insiders have.

Very unfortunately, the Pakistani instinct will be to object that a paid-informer regime will be abused, and the objection deserves a serious answer rather than dismissal, because our enforcement culture has known the false complaint, the motivated raid and the FIR used as an instrument of pressure. The answer is in the design, and the Honourable Supreme Court of Pakistan has already supplied its governing principle: in Shahid Chaudhry v The State (Criminal Petition No.174 of 2026, decided 27th February 2026), following Directorate of Intelligence and Investigation-FBR v Taj International (Pvt) Ltd (PLD 2025 SC 633), their Lordships held that a money laundering charge is derivative of a determined predicate offence and that criminal law is not a tool for the recovery of money. A whistleblower's information must accordingly feed analysis and assessment, not an instant FIR; the reward must be contingent on recovery actually adjudicated, as the Inland Revenue Reward Rules, 2021 already provide for tax; and the penalty for knowingly false information must be written into the same chapter as the reward.

The American regime supplies the remaining design lessons, and they are lessons of detail rather than ideology. The award is a percentage of what the state actually recovers, so the informant is paid from the criminal's pocket and not the taxpayer's; there is a floor as well as a ceiling, because an award that is discretionary in toto is an award nobody trusts; compliance officers and auditors are eligible, because they are precisely the people who know; retaliation, dismissal, demotion and blacklisting give rise to an independent cause of action; and the identity of the informant is protected through the proceedings. Keeping in view that the FMU disseminated 510 financial intelligence reports to law enforcement agencies in a single quarter while tax crimes, at 99 items, and Hawala and Hundi, at 80, led its predicate tables, the marginal value of even a handful of genuine insiders in the exchange companies, the housing schemes and the trade-based laundering rings is obvious; hence the present architecture, which pays the informer for income tax but offers him nothing for the laundering of the very same money, needs serious reconsideration.

In the light of the above, it is urgently required that Parliament insert a whistleblower chapter into the Anti-Money Laundering Act, 2010, providing a reward calculated as a percentage of proceeds actually recovered upon adjudicated forfeiture, protection against retaliation for employees of reporting entities enforceable before the courts, eligibility for compliance personnel, confidentiality of identity, and punishment for knowingly false reporting; that the federal "Whistleblower Protection and Vigilance Commission" Bill of 2019 be revived and enacted so that protection does not remain a provincial accident of geography; and that the Federal Board of Revenue publish annually the number and value of rewards actually paid under the Inland Revenue Reward Rules, 2021, for the reasons best known to which nothing of the kind is published today, so that the informer contemplating the risk can see that the promise is kept in field and not merely printed.

America pays its whistleblowers because it has done the arithmetic: a percentage of a recovered billion is cheaper than an army of investigators who never find it. Pakistan, which cannot afford the army, can least afford to go on doing without the insider.