In the course of performing their job duties, bank tellers and their supervisors may occasionally be asked to perform a transaction that appears to be somewhat suspicious. For example, a non-customer of the bank may arrive in the teller line and ask to cash a large check drawn on an account of one of the bank's customers. In some such cases, bank personnel may come to believe that the subject transaction is fraudulent. While most banks have very detailed procedures for addressing these situations, bank personnel must sometimes make a quick decision about whether to alert law enforcement personnel. In certain cases, though, bank employees may have concerns about whether they will incur civil liability to the non-customer if they alert the police but the transaction ultimately turns out to be legitimate. While such concerns are certainly understandable in our highly litigious society, bank personnel can take some comfort in knowing that federal law provides them with considerable protection in these situations.
The "safe harbor" provision of the Annunzio-Wylie Anti-Money Laundering Act states:
Any financial institution that makes a voluntary disclosure of any possible violation of law or regulation to a government agency..., and any director, officer, employee or agent of such institution who makes or requires another to make any such disclosure, shall not be liable to any person under any law or regulation of the United States, any constitution, law or regulation of any State or political subdivision of any State or under any contract or other legally enforceable agreement (including any arbitration agreement), for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in the disclosure.
31 U.S.C. § 5318(g)(3)(A).
This statute protects disclosures by banks of any possible violation of law, even if the disclosure is not tied to any legal mandate. Stoutt v. Banco Popular De Puerto Rico, 320 F.3d 26, 30 (1st Cir. 2003). As one court has noted, "it simply does not matter whether or not [the defendant bank] was required to report anything, nor does it matter whether [the bank] reported violations in the proper manner. The immunization provision clearly applies to . . . 'voluntary disclosure[s].'" Henry v. Bank of America Corporation, 2010 WL 431969 at *4 (N.D. Cal. 2010). See also 12 CFR § 208.62(k) (safe harbor immunity "covers all reports of suspected or known criminal violations and suspicious activities to law enforcement and financial institution supervisory authorities . . . regardless of whether such reports . . . are filed on a voluntary basis").
The U.S. Court of Appeals for the First Circuit (which hears appeals from U.S. District Courts in Maine, Massachusetts, New Hampshire, Rhode Island, and Puerto Rico) has held that this statutory immunity is absolute, and applies to negligent, and even to malicious, disclosures made by banks. Stoutt, supra, 320 F.3d at 33. See also Lee v. Bankers Trust Company, 166 F.3d 540, 544 (2d Cir. 1999) ("There is not even a hint [in the statute] that the statements must be made in good faith in order to benefit from immunity"); Henry, supra, 2010 WL 431969 at *5 ("[T]o impose a good faith requirement on top of th[e] clear statutory text would result in a far narrower preemption provision").1
In situations where bank personnel make the difficult decision to contact law enforcement authorities, their vigilance is sometimes "rewarded" with a subsequent lawsuit alleging wrongful arrest, defamation, discrimination, or other claims. In such cases, the "safe harbor" provision of the Annunzio-Wylie Anti-Money Laundering Act can be a powerful defense. Fitch Law Partners LLP has considerable experience with this issue and stands ready to assist banks and their employees when the need arises.
1 In contrast to the First Circuit, the Supreme Court of Arkansas has held that only good-faith reports to law enforcement officials are entitled to immunity. See Bank of Eureka Springs v. Evans, 353 Ark. 438, 109 S.W.3d 672 (2003).