After months of reporting on ongoing intensified enforcement efforts, senior management at the U.S. Department of Justice (DOJ) announced several new initiatives to tackle white-collar crime. Some of the policy changes were previewed by Deputy Attorney General (DAG) Lisa Monaco in a demanding message to the White Collar Defense Bar of the 36th National Institute on White Collar Crime of the American Bar Association. Speaking to an audience of white-collar criminal defense lawyers, DAG Monaco presented a series of initiatives, some of which reverse lenient enforcement policies adopted under the previous administration. In the wake of the DAG Monaco announcement, the DOJ published a more detailed memorandum officially deploying the new policies.
As discussed in more detail below, the effort discussed in DAG Monaco’s speech and subsequent memorandum has ramifications at both the individual and corporate level, including: (1) increased individual responsibility; (2) the emphasis on corporate recidivism as a key part of penalty considerations; and (3) closer scrutiny of corporate remediation efforts, including the imposition of monitors where warranted.
With the introduction of these new policies, companies can prepare by focusing on preventive compliance efforts, including the routine assessment of their ethics and compliance programs and internal reporting mechanisms.
What is the DOJ program?
Focus on individual responsibility. First, the DOJ is renewing its focus on holding individual actors accountable for corporate wrongdoing by reviving its policy that corporations will only be eligible for the Resolutions Cooperation Credit if they provide prosecutors with unprivileged information about all individuals. involved or responsible for the misconduct. involved, whatever the position, status or seniority of the person. This includes people inside and outside the company. This statement overrides previous DOJ guidelines, which allowed companies to receive cooperation credit for disclosing only those “substantially involved” in the misconduct.
The justice manual will be revised at JM numbers 9-28.700 and 9-47.120 to implement this policy change.
A broader vision of recidivism in the workplace. Second, DAG Monaco has announced a significant change in the way historical faults will be taken into account in corporate resolutions. Under the new Justice Department guidelines, prosecutors will not only review previous similar misconduct, but will also assess a company’s overall criminal, civil and / or regulatory history by assessing the appropriate resolution for a topic. or a target of criminal investigation, including overseas law enforcement actions and execution against parent companies, subsidiaries and other entities within the corporate family.
The DAG Monaco memorandum explained that a company’s history of misconduct can be indicative of the company’s culture of compliance and its overall commitment to ethical business practices. These factors are likely to be central to DOJ’s considerations of whether a company’s remediation efforts are likely to be successful in the absence of strong external oversight (i.e., a supervisor of ‘business).
This broader perspective of historical faults, especially if a business has been targeted by another regulator or even another country, results in a host of additional potentially relevant faults, which could have significant implications for corporate resolutions. For example, DAG Monaco suggested that the DOJ will examine data on corporate recidivism to determine whether there are any pre-trial diversion routes – including variations, non-prosecution agreements (NPAs), and non-prosecution agreements. deferred prosecution (DPA) – should be available. repeat business.
The justice manual will be revised at JM 9-28.600 to take into account this extended analysis of recidivism in the workplace.
Return of corporate surveillance. Third, DAG Monaco has indicated that, where appropriate, the DOJ will deploy company controllers to verify compliance and disclosure obligations imposed by the terms of NPAs and DPAs entered into between companies and the DOJ. The Monaco declaration explicitly revoked the 2018 directives issued by then Deputy Attorney General Brian Benczkowski. The “Benczkowski memo” was generally viewed as a more “user-friendly” approach to DOJ’s practice of imposing corporate oversight as a condition of settlement, establishing a presumption against oversight, except in extenuating circumstances. DAG Monaco suggested that the DOJ could use checks more frequently to ensure that companies are meeting their obligations imposed by company resolutions.
In particular, the new directive explicitly states that the DOJ should consider “” controllers[w]here, a company’s compliance program and controls are not tested, ineffective, under-resourced, or not fully implemented at the time of resolution ”and, in particular, when a company’s controls are “Deficient or inadequate in many respects or material”.
What’s on the horizon?
To begin with, this increase in enforcement will be supported by an increase in resources provided to DOJ prosecutors, including a new squad of FBI agents integrated into the DOJ criminal fraud section, placing “officers and prosecutors in the same hole ”, as DAG Monaco described it. this.
More generally, the Ministry of Justice will assess the application of corporate criminal laws through the new “Corporate Crime Advisory Group”, which will be made up of representatives of all departments involved in the application of corporate criminal laws. companies and consult with stakeholders from industry, academia and the defense bar. As explained by DAG Monaco, the advisory group has a broad mandate to study corporate resolutions, recidivism, checks and references for cooperation credit in enforcement sanctions, and make recommendations to the DOJ leadership on potential improvements to corporate crime enforcement. The group will also examine how to take advantage of new technologies and resources to support criminal investigations and law enforcement.
What are the practical take-out meals?
Unsurprisingly, these sweeping statements have reverberated among white-collar defense practitioners and businesses since their announcement in late October. So what does all of this mean for business compliance efforts?
First, companies should review their compliance policies and procedures to ensure that they are effectively implemented and provide appropriate levels of detection and redress for wrongdoing, including ensuring adequate compliance resources. In the event that wrongdoing is discovered, these new policies serve to further underscore the significant weight the DOJ will place on the state of corporate compliance controls in determining appropriate corporate enforcement resolutions. In particular, companies should assess whether they have a reasonable mechanism in place to test and improve their controls on a periodic basis and document efforts to ensure that the program continues to effectively target key areas of risk. These efforts will reduce the risk of breaches slipping through the cracks, but they will also serve as powerful evidence of the company’s commitment to comply in the event of an enforcement investigation.
Second, companies should review their internal reporting and investigation protocols, ensuring that there are strong and widely known means of internal reporting of potential misconduct as well as established protocols for escalating and investigating allegations. Voluntary, timely disclosure and full cooperation are often essential to benefit from leniency in corporate resolutions. Under the new policy, to receive cooperation credit, a company will need to identify all internal and external individuals involved in the misconduct in any way and be able to produce any non-privileged information about the involvement. of these individuals.
Third, in the event that an allegation of misconduct is substantiated, companies will now have to take into account the entirety of all previous enforcement resolutions – domestic and foreign, criminal and regulatory – in calculating the potential results of the trial. application. For companies with a long list of past misconduct, being able to demonstrate the effective implementation of a strong and timely compliance program, full cooperation will be even more important to mitigate the impact than the new policy. recidivism may have on the final resolution of any enforcement action.
The whip of corporate enforcement policies that accompanies each new administration is not a foreign concept to many companies potentially subject to DOJ enforcement. However, to those who take a wait-and-see approach, DAG Monaco has delivered a clear message: now is the time to step up efforts in compliance and ethics reporting, including internal detection and resolution of potential misconduct. . As DAG Monaco mentioned, these recently announced policy changes are just a “start” of this administration’s corporate compliance mission.
Jamie A. Schafer and Regina L. LaMonica are partners of the White Collar Practice and Perkins Coie Surveys. They represent businesses and individuals in a wide range of white-collar criminal matters, including the Foreign Corrupt Practices Act, federal securities laws and regulations, and anti-money laundering. silver.