Continuing focus on accountability and cooperation
Pursuant to the Deputy Attorney General’s September 2022 memorandum (Monaco Memo – see KPMG’s Regulatory Alert, here), as well as the DOJ Criminal Division’s recent revision of its Corporate Enforcement Policy (see KPMG’s Regulatory Alert, here), the DOJ recently announced initiatives that reinforce the agency’s continuing focus on corporate compliance, enforcement, and accountability:
These announcements are outlined in further detail below.
The DOJ’s Criminal Division announced it will launch a three-year pilot program, beginning March 15, on Compensation Incentives and Clawbacks. The program was developed giving consideration to how policies might seek to potentially “shift the burden of corporate wrongdoing away from shareholders—who frequently play no role in misconduct—onto those more directly responsible,” as well as to reward companies that incentivize compliance through compensation programs. The pilot program consists of two parts:
The DOJ’s United States Attorneys’ Offices (USAOs) announced the implementation of a new VSD policy.
DOJ states the policy is intended to provide “transparency and predictability” to companies by standardizing how VSDs are defined and credited by USAOs nationwide, and to incentivize companies to maintain effective compliance programs capable of timely identification, voluntary self-disclosure, and remediation of misconduct, as well as full cooperation with the government in corporate criminal investigations.
The policy, which is effective immediately, outlines the circumstances under which a company will be considered to have made a VSD of misconduct to a USAO.
Standards. A company will be required to meet each of the following standards:
Benefits. A company that provides a VSD and meets the other requirements of the policy, involving full cooperation and timely remediation of criminal conduct (including, but not limited to, agreeing to pay all disgorgement, forfeiture, and/or restitution resulting from the misconduct), and in the absence of any aggravating factor (outlined below), will receive credit for the VSD and “significant” benefits, including the USAO not:
Aggravating Factors. The policy identifies three aggravating factors that may warrant a USAO seeking a guilty plea or criminal penalties, even if the other requirements of the VSD policy are met. These include situations where the misconduct:
The policy notes that the presence of an aggravating factor does not necessarily mean that a guilty plea will be required, rather the USAO may assess the relevant facts and circumstances to determine the appropriate resolution. If a guilty plea is required, a company may still receive the other benefits under the VSD policy, including the USAO recommending a criminal penalty of at least 50 to 75 percent reduction off the low end of the USSG fine range and not requiring the appointment of a monitor if a company has implemented and tested an effective compliance program.
Effective Compliance and Independent Monitorship. As stated above, the USAO will not require the imposition of an independent compliance monitor if a company demonstrates it has implemented and tested an effective compliance program. These decisions will be made on a case-by-case basis and at the sole discretion of the USAO. In evaluating the adequacy of a company’s compliance program, the USAO will refer to the “Monaco Memo” (which provides “a mix of incentives and deterrence” to enhance corporate compliance in areas such as individual accountability, history of misconduct, VSD, independent compliance monitors, and corporate culture), in addition to other resources developed by DOJ’s Criminal Division to assist in assessing the effectiveness of a company’s compliance program as well as guidance provided by other DOJ Divisions as to specialized areas of corporate compliance.
The Assistant Attorney General announced changes to the ECCP regarding how DOJ will consider a company’s “approach to the use of personal devices as well as various communications platforms and messaging applications, including those offering ephemeral messaging.” In particular, DOJ will consider:
(See related KPMG Regulatory Alert, here, on increasing regulatory expectations for data retention and deletion.)
DOJ announced new resource commitments and a restructuring of its National Security Division to address “the intersection of corporate crime and national security” by adding more than 25 new prosecutors to investigate and prosecute sanctions evasion, export control violations, and similar economic crimes. With regard to corporate sanctions violations, the National Security Division will work closely with U.S. Attorneys’ Offices and the Criminal Division. Concurrently, the Criminal Division intends to make a “substantial investment” into its Bank Integrity Unit (part of the Money Laundering and Asset Recovery Section) to strengthen prosecutions of global financial institutions for sanctions violations.
DOJ Initiatives on Compensation, Voluntary Self-Disclosure, Personal DevicesDownload PDF