New fraud review could incentivise whistleblowers

The recent announcement of a Fraud Review has sparked discussions about the potential for incentivising whistleblowers in the UK. Neil Robson, a partner at Katten Muchin Rosenman LLP, highlighted the effectiveness of such schemes in the United States, where whistleblowers can receive significant financial rewards for providing information regarding wrongdoing. He noted, “For a long time, in the USA the rules have been such that whistleblowers have been financially incentivised to provide information on wrongdoing.” This approach has proven successful, as it encourages individuals to come forward with critical information.

In the US, the Internal Revenue Service (IRS) has a Whistleblower Office that awards monetary compensation to those whose tips lead to successful enforcement actions. The amount awarded can range from 15 to 30 percent of the proceeds collected. Similarly, the Securities and Exchange Commission (SEC) operates a whistleblower program that grants financial rewards based on the quality and significance of the information provided, with payouts starting at $100,000 and going as high as 30 percent of the sanctions imposed.

With the UK government planning to assess similar structures as part of the Fraud Review, Robson expressed his support for this initiative. He stated, “It is therefore potentially very financially rewarding for whistleblowers to make disclosures and provide information to the US authorities.” The proposed reward scheme aligns with HM Revenue and Customs (HMRC)'s upcoming launch of its own informant reward programme.

Robson argued that a structured reward scheme for whistleblowers in the UK would be a beneficial step. He explained, “A whistleblowers reward scheme that incentivises people to act as ‘informants’ and provide useful information to allow UK enforcement agencies to prosecute wrongdoing has to be one area that is a win for society.” By providing an incentive, the UK could retain informants who might otherwise seek to offer their intelligence to US authorities, resulting in greater resources for domestic law enforcement and enhancing justice for UK victims.

In summary, the proposed measures in the Fraud Review aim to foster an environment where whistleblowers feel secure and motivated to disclose wrongdoing, ultimately benefiting society and improving enforcement capabilities