On March 30, 2026, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) submitted a Notice of Proposed Rulemaking (“NPRM”) for publication in the Federal Register that would, for the first time, establish a comprehensive framework for paying monetary awards to individuals who report violations of the Bank Secrecy Act (“BSA”), U.S. sanctions programs administered by the Office of Foreign Assets Control (“OFAC”), and several other laws critical to safeguarding the financial system and national security. The proposed rule is the culmination of a multi-year legislative effort to create financial incentives and protections comparable to the longstanding whistleblower programs administered by the U.S. Securities and Exchange Commission (“SEC”), U.S. Commodity Futures Trading Commission (“CFTC”), Internal Revenue Service (“IRS”), and other agencies. Although FinCEN has accepted tips since launching a dedicated whistleblower portal in February 2026, the NPRM, if adopted as a final rule, would allow for the payment of substantial monetary awards from a $300 million revolving fund. This alert summarizes the proposal’s key provisions, compares the proposed program to its federal counterparts, and identifies practical implications for financial institutions, compliance professionals, and potential whistleblowers.
White House Releases AI Legislative Recommendations—Congress Has the Blueprint, but Questions Remain
On March 20, 2026, the White House unveiled its National Policy Framework for Artificial Intelligence, providing a blueprint on legislative recommendations and urging Congress to act. It recommends that Congress create a unified federal standard to reduce the regulatory friction of competing state AI regimes, promote AI innovation and develop an AI-ready workforce, while ensuring the protection of children, consumers and intellectual property rights.
The framework is a serious, if incomplete, attempt to bring coherence to an enforcement landscape that has been improvising. Congress has been handed a blueprint, but whether it is able to enact comprehensive federal legislation is another matter.
Read on to learn more about the framework and how companies using AI should prepare.
New GSA Proposal Could Expose Federally Funded Institutions With Programs Perceived as DEI-Related
The General Services Administration has proposed requiring all federal funding recipients to certify that they do not maintain diversity, equity, inclusion and accessibility programs. Recipients also would also need to certify they are not knowingly hiring or recruiting undocumented staff.
The GSA estimates the proposal would impact approximately 222,760 entities — including colleges and universities. If enacted, the certification requirements would expose grant recipients to potential liability under the False Claims Act. The deadline for public comments is March 30, 2026.
Read on to learn more about the GSA proposal and its potential impacts on federally funded institutions.
SEC and FinCEN Hit Broker-Dealer for Sweeping AML Compliance Failures
On March 6, 2026, the SEC and FinCEN announced parallel enforcement actions against a New York-based registered broker-dealer for systemic anti-money laundering (“AML”) failures, imposing combined penalties of $80 million – the largest ever imposed against a broker-dealer for BSA violations. FinCEN’s $80 million headline penalty includes credits of $20 million each to the SEC and FINRA, with $35 million payable directly to the Treasury; the SEC separately imposed a $20 million penalty and a censure. This alert summarizes the key findings, penalties, and practical takeaways for broker-dealers and other financial institutions.
DAAG Provides Views on FCA Enforcement Focus: Targeting Discrimination, Not DEI Programs Per Se
At the Federal Bar Association’s 2026 Qui Tam Conference on February 19, 2026, Brenna Jenny, Deputy Assistant Attorney General (DAAG) in the U.S. Department of Justice’s (DOJ) Commercial Litigation Branch, delivered a keynote speech on enforcement priorities under the False Claims Act (FCA) with respect to diversity, equity, and inclusion (DEI) programs. Jenny’s reported remarks provided insight into DOJ’s enforcement priorities and viewpoints on FCA enforcement. A key takeaway from Jenny’s presentation is that, from her perspective, DOJ is not investigating federal contractors and grant recipients for having DEI programs, but rather for potentially engaging in discrimination through their implementation of those programs. She emphasized that companies can engage in discrimination with or without DEI programs and can also operate DEI programs without engaging in discrimination.
When AI Isn’t Privileged, Confirmed: SDNY’s Written Opinion Elaborates on Confidentiality, Work Product, and Waiver
On February 10, 2026, U.S. District Judge Jed Rakoff of the Southern District of New York issued a bench ruling holding that a defendant’s use of generative AI to analyze legal exposure is not protected under attorney-client privilege or the work product doctrine. See When AI Isn’t Privileged: SDNY Rules Generative AI Documents Not Protected. On February 17, 2026, Judge Rakoff issued a written opinion confirming the bench ruling and adding important analysis. This client alert outlines what the written opinion adds on confidentiality, work product, and waiver, and details the practical implications and open questions left by Judge Rakoff’s opinion.
OFAC Enforcement Action Against Academic Institution Provides Important Compliance Guidance
On February 12, 2026, Treasury’s Office of Foreign Assets Control (OFAC) announced the settlement of an enforcement action against IMG Academy (“IMG”) that highlighted the sanctions risks that U.S. academic institutions face and the steps OFAC recommends the institutions to take the address the risks. The enforcement action stemmed from IMG accepting tuition payments from two Specially Designated National (“SDN”) individuals who had been sanctioned under the Foreign Narcotics Kingpin Designation Act for providing support to a sanctioned Mexican Drug Trafficking Organization (“MDTO”).
IMG is an elite sports training and boarding school for grades 6-12 that is located in Bradenton, Florida. IMG’s student body includes athletes from all over the world. In two separate instances, SDNs enrolled their children in IMG’s boarding programs, entering into yearly tuition contracts for each academic year. One child of an SDN attended IMG for five academic years, from 2018 until graduation in 2023. The other child attended IMG for two academic years, from 2020 to 2022. Tuition for each child was around $100,000 a year.
When AI Isn’t Privileged: SDNY Rules Generative AI Documents Not Protected
Executive Summary
- Independent, unsupervised use of generative AI to analyze legal exposure may not be privileged. A federal court held that a defendant’s AI prompts and outputs relating to a criminal investigation of his conduct were not protected after they were seized pursuant to a search warrant.
- Platform terms matter. If an AI provider reserves rights to retain, train on, or disclose user inputs, courts may find confidentiality—and therefore privilege—compromised.
- Structure AI use under counsel’s direction. The ruling leaves open whether counsel-directed enterprise AI use on a secure platform with strong confidentiality terms may be treated differently. Governance and process may be outcome-determinative.
DoW Announces Line-by-Line Review of Certain 8(a) Contracts Amid Government-wide Scrutiny of the 8(a) Program
On January 16, 2026, the Secretary of War Pete Hegseth posted a video on social media announcing that the Department of War will conduct a “line‑by‑line review of every small business, sole source, 8(a) contract that is over $20 million,” focusing on impermissible pass‑throughs to large businesses. This action by the DoW aligns with broader federal investigations and audits of the 8(a) program.
Creation of DOJ Fraud Division Signals Increased White-Collar Enforcement
On Jan. 8, 2026, the White House announced the establishment of the DOJ’s Division for National Fraud Enforcement. The Trump administration stated that the new division will “combat the rampant and pervasive problem of fraud in the United States” and “enforce the Federal criminal and civil laws against fraud targeting Federal government programs, Federally funded benefits, businesses, nonprofits, and private citizens nationwide.” This announcement expands upon the Trump administration’s efforts to use the False Claims Act in connection with increased enforcement in areas including DEI initiatives, healthcare fraud and cybersecurity issues. While the creation of the new division accompanied no change in law, federally funded entities should be aware that it may signal increased white-collar enforcement mirroring the administration’s policy priorities.