U.S. Department of Justice Issues New Guidance on Corporate Compliance Programs
The U.S. Department of Justice (“DOJ”) Criminal Division, Fraud Section, recently published new guidance on corporate compliance programs. All corporate counsel, officers, and directors should be aware of this guidance, and corporate compliance professionals should ensure not only that compliance policies follow this guidance, but that actual practices also meet the expectations outlined by the DOJ.
On February 8, 2017, the DOJ published guidance entitled, “Evaluation of Corporate Compliance Programs,”1 which “provides some important topics and sample questions that the Fraud Section has frequently found relevant in evaluating a corporate compliance program.” This is important information for every business to be aware of, and this guidance is particularly interesting because it is the first formal guidance issued by the DOJ under the Trump administration and Attorney General Jeff Sessions.
Federal prosecutors are guided by factors set forth in “The Principles of Federal Prosecution of Business Organizations,” published in the United States Attorneys’ Manual,2 when determining whether to bring criminal charges against a corporate entity. Among these so-called “Filip Factors” are “the existence and effectiveness of the corporation’s pre-existing compliance program,” and the corporation’s remedial efforts “to implement an effective corporate compliance program or to improve an existing one.”3
The DOJ’s new compliance guidance sets forth 11 high-level topics. The topics are compiled from other resources, including the United States Attorneys’ Manual; the United States Sentencing Commission’s Guidelines Manual; the DOJ’s November 2012 publication, A Resource Guide to the U.S. Foreign Corrupt Practices Act; and the Organization for Economic Co-operation and Development Council’s 2013 publication, Anti-Corruption Ethics and Compliance Handbook for Business, among others.
The 11 High-Level Topics in the Guidance Are:
- Analysis and Remediation of Underlying Conduct
- Senior and Middle Management
- Autonomy and Resources
- Policies and Procedures
- Risk Assessment
- Training and Communications
- Confidential Reporting and Investigation
- Incentives and Disciplinary Measures
- Continuous Improvement, Periodic Testing, and Review
- Third Party Management
- Mergers and Acquisitions
Under each of these 11 topics, the DOJ’s guidance sets forth multiple sample questions that prosecutors are likely to probe into during an investigation. A few examples are:
- Analysis and Remediation of Underlying Misconduct: Were there prior opportunities to detect the misconduct in question, such as audit reports identifying relevant control failures or allegations, complaints, or investigations involving similar issues?
- Senior and Middle Management: How has senior leadership modelled proper behavior to subordinates?
- Risk Assessment: What methodology has the company used to identify, analyze, and address the particular risks it faced?
- Training and Communications: What training have employees in relevant control functions received? Has the company provided tailored training for high-risk and control employees that addressed the risks in the area where the misconduct occurred?
- Confidential Reporting and Investigation: How has the company collected, analyzed, and used information from its reporting mechanisms?
- U.S. Department of Justice, Criminal Division, Fraud Section, “Evaluation of Corporate Compliance Programs,” available at www.justice.gov/criminal-fraud/page/file/937501/download.
- U.S. Attorneys’ Manual § 9-28.000, available at www.justice.gov/usam/usam-9-28000-principles-federal-prosecution-business-organizations.
- Id. § 9-28.300, available at www.justice.gov/usam/usam-9-28000-principles-federal-prosecution-business-organizations#9-28.300.
©2017 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.