I. Refinement of Corporate Criminal Enforcement Principles by Department of Justice

This year, the Department of Justice (DOJ) continued to reaffirm the importance of its June 2020 Evaluation of Corporate Compliance Programs, June 2020 guidance (DOJ Guidance)36 and to further announce important new initiatives that increase the accountability of both corporations and individuals alike. The new initiatives provide corporations and individuals with incentives, such as avoidance of prosecution, reduced fines and penalties, and no imposition of corporate monitor when they take appropriate steps to maintain an effective compliance program.

In March, the Department of Justice (DOJ) Criminal Division announced that, moving forward, the DOJ was considering, whether all corporate criminal settlements, including guilty pleas, deferred prosecution agreement and non-prosecution agreements, should require Chief Executive Officers (CEOs) and Chief Compliance Officers (CCOs) to certify the effectiveness and functionality of the ethics and compliance program at the end of any agreement term. In a speech at the ACAMS 2022 Hollywood Conference, Assistant Attorney General Kenneth A. Polite Jr. articulated that the goal of the certification requirement was not punitive, but rather, intended to empower companies, and especially CCOs, by placing them in a truly independent role with appropriate authority, power and stature within the company to ensure that the company has an ethical and compliance focused environment.37

In September, DOJ announced more revisions to its existing corporate criminal enforcement policies and practices through a memorandum titled "Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group" ("DOJ Memorandum").38 The principles articulated in the DOJ Memorandum confirm: i) that corporate criminal enforcement remains one of DOJ's enforcement priorities with respect to how prosecutors should ensure individual and corporate accountability, and ii) that DOJ expects companies to be regularly assessing the effectiveness of their compliance programs, in order to identify and remediate non-compliant activities, and to self-report corporate wrongdoing when appropriation.

The DOJ Memorandum emphasized the following principles:

  • Individual Accountability - Ensuring accountability for individuals who commit and profit from corporate criminal activities remains a top priority for DOJ.
  • Corporate Accountability - Determining a corporation's culpability for criminal conduct will include a review by DOJ of a corporation's history of misconduct to assess whether the misconduct may be interpreted to indicate broader or systemic weaknesses in the corporate compliance program.
  • Voluntary Self-Disclosure and Cooperation - Incentivizing companies to self-report and timely resolve misconduct and provide full disclosure to and full cooperation with DOJ is of paramount importance, and the efforts taken by companies to do so will influence DOJ's determination of whether or not to impose an independent monitor.
  • Self-Assessment - Assessing the strength of a corporation' s existing compliance program against published criteria such as the DOJ Guidance is something that DOJ expects from companies looking to avoid penalties. DOJ indicates that it will place renewed emphasis on whether the company has: (i) implemented compensation systems to incentivize compliance and financially penalize misconduct, (ii) incorporated clawback provisions into employee agreements, and (iii) adopted effective policies and training program around employee use of company data on personal devices and third party messaging platforms to ensure that business-related electronic data and communications are preserved.
  • Use of Monitors - On a case-by-case basis, DOJ will assess the need for independent monitors, evaluating such things as the corporation's cooperation, its history of misconduct (including, prior criminal, civil, and regulatory resolutions, both domestically and internationally), whether the corporation voluntarily disclosed information to DOJ, and the frequency of testing of its compliance program to identify weaknesses.

The DOJ Memorandum sends a clear message to corporations and their management teams that going forward, it will continue to pursue aggressive enforcement against both criminal corporate conduct and criminal conduct committed by individuals. In response, companies and their CCOs should be diligent about regularly reviewing and documenting their compliance programs through auditing and monitoring activities. Additionally, companies should ensure that:

  • its corporate risk profile is updated to meet changing business activities and regulatory requirements;
  • misconduct is quickly identified and adequately remediated;
  • compensation systems incentivize individuals to engage in compliant behavior; and
  • there is executive oversight of the company's compliance programs.

By utilizing the principles articulated in the DOJ Memorandum, as well as in previous DOJ pronouncements, companies can identify and control behaviors that might otherwise create long-term risks for them.

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Footnotes

36. Evaluation of Corporate Compliance Programs, (Updated June 2020), https://www.justice.gov/criminal- fraud/page/file/937501/download#:~:text=Prosecutors%20evaluating%20the%20effectiveness%20of,remedial%20 actions%20taken%20by%20the

37. Assistant Attorney General Kenneth A. Polite Jr. Delivers Remarks at ACAMS 2022 Hollywood Conference, https://www.justice.gov/opa/speech/assistant-attorney-general-kenneth-polite-jr-delivers-remarks-acams-2022-hollywood.

38. Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group, https://www.justice.gov/opa/speech/file/1535301/download. See also Deputy Attorney General Lisa O. Monaco Delivers Remarks on Corporate Criminal Enforcement, https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-remarks-corporate-criminal-enforcement.

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