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The Snowden effect? Whistleblowing sees sharp rise

U.K. whistleblowers were responsible for the most overseas tip-offs to the U.S. financial authority last fiscal year, a new study reveals.

The Securities and Exchange Commission (SEC) received 3,238 tip-offs in total in the past year, with 12 percent of these coming from abroad, according to global investigations firm Kroll.


One in six tip-offs to the SEC were received from the U.K., in a year that saw a 25 percent increase in the number of tip-offs from foreign countries to the American regulators.

Kroll also revealed a 35 percent increase in the number of cases being reported by whistleblowers to the U.K.'s Financial Conduct Authority (FCA), from 3,813 to 5,150 between November 2012 and October 2013.

This has resulted in a steep rise in the number of cases being created by the FCA, increasing 72 percent in the third quarter of 2013 compared to the same period the previous year.

(Read more: NSA leaker Snowden lands job at Russian website)

"As companies increasingly invest in often risky emerging markets and more stringent regulation and guidance governing whistleblowing procedures is introduced, we believe cases of whistleblowing will continue to rise," Benedict Hamilton, a Managing Director at Kroll said in a press release.

Whistleblowing has been in the spotlight after former National Security Agency contractor Edward Snowden released explosive documents detailing the extent of the U.S.'s surveillance operations. The revelations have prompted huge furore from politicians and companies implicated in the saga.

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Canada is home to the second largest number of overseas whistleblowers with 62 tip-offs, 15 percent of all those from outside the US, while China with 52 tip-offs follows in third. Russia and India make the remaining top five.

The Global Fraud Report by Kroll shows that a whistleblower was involved in one in three incidents of all cases where fraud was uncovered and in a staggering 41 percent of cases that involved senior or middle management.

(Read more: US spying a 'slap in the face': EU lawmaker)

Four whisteblowers have cashed in on payouts from the SEC in the last fiscal year, with one being awarded $14 million, under the U.S.'s Dodd Frank Act which gives protection to those who expose misconduct. Financial rewards for whistleblowers will give extra incentives for people to report wrongdoing, according to Hamilton.

"The U.K. authorities are considering offering rewards to whistleblowers, as they are a very effective way of discovering fraud. The increase in overseas whistleblower tip-offs to the SEC shows the policy's impact on international companies in particular," he said.

"Those thinking about reporting corporate malpractice might be tempted to go to the U.S. regulator rather than their own company, wherever they are based in the world, in the hope of receiving a substantial reward."

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal

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