Court Interprets Retaliation Provision of the Bank Secrecy Act

In Taft v. Agric. Bank of China Ltd., No. 15 CIV. 5321 (PAE), 2016 WL 80209 (S.D.N.Y. Jan. 6, 2016), the Southern District of New York ruled on defendant’s motion to dismiss plaintiff’s whistleblower retaliation claim under the Bank Secrecy Act (BSA).

Plaintiff alleged that “she was subjected to frequent sexually charged comments and gender-related mistreatment, and, further, that ABC retaliated against her after she brought certain issues to the attention of the Federal Reserve Bank of New York (FRBNY).

Plaintiff’s whistleblower claim arose under 31 U.S.C. § 5328(a), which

protects (1) employees of financial institutions who (2) provide information regarding a possible violation of specified laws and regulations by the financial institution, its directors, officers, or employees, to (3) the Treasury Secretary, Attorney General, or ‘any Federal supervisory agency, from (4) employment-related discrimination (5) because they made such a report.

Although the court dismissed plaintiff’s BSA retaliation claim (with leave to replead), it offers some helpful guidance on how it should be interpreted.

For example, it explained that “an employee whose duties included compliance and regulatory reporting is not precluded from stating a retaliation claim under the BSA merely because the retaliation was in response to a report that the employee’s job description required her to make.”

It goes on to explain, however, that

for an act of “provid[ing] information” about a possible violation of law to be protected as a whistleblower communication, the bank employee must have acted independently of the bank. Put in statutory terms, when the employee does not act independently of the bank, but merely conveys a bank-approved report, it is the bank, and not the “employee” as required by § 5328(a), that has “provided” the information.

Here, the court held that plaintiff’s “pleadings and the text of her communications with the FRBNY … do not make plausible the claim … that the report to FRBNY was an independent act of Taft’s.” It also held that plaintiff’s “memo to the FRBNY, even as explicated by the Amended Complaint, fell short of reporting information regarding a possible violation of law.” It held, however, that plaintiff adequately alleged causation, noting her claim that only three months passed between her memo and the first adverse adverse employment actions taken against her.

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