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US Department of Justice Updates Prosecutor Guidance On Evaluating Corporate Compliance Programs in Criminal Investigations of White Collar Crimes


In June, the US Department of Justice released an updated Evaluation of Corporate Compliance Programs, which is used at the time of a white-collar offense, as well as at the time of a charging decision, by prosecutors in conducting an investigation of a company and in deciding whether to bring chargers or negotiate a plea or other agreement, as well as in calculating an appropriate criminal fine.

Because prosecutors rely on the guidelines to decide whether to penalize a corporation as the result of criminal investigation, it is important to be aware of what they mean and ensure that your program is in compliance with them. In using the guidelines, there are three fundamental questions that prosecutors are instructed to ask:

  • Is the compliance program well designed?
  • Is the program applied earnestly and in good faith (i.e. is it adequately resourced and empowered to function effectively)?
  • Does it work in practice?

Is The Compliance Program Well-Designed?

Another way of looking at whether the program is “well-designed” is whether the program can detect and prevent wrongdoing. Prosecutors are instructed to look at whether there are policies, procedures, training programs, incentives, and discipline in place and integrated into the workforce and operations. This is done by looking closely at:

  • To what extent the company has analyzed and addressed the risks presented by a number of decisions, such as its operation location(s), business partners, use of third parties, etc.;
  • How the company identifies risks and misconduct–Does it devote a disproportionate amount of time to low versus high risk areas? Does it update its risk assessments to incorporate lessons learned? Etc.
  • What the process is for drafting and updating policies and procedures, and providing them to the employees and third parties, who is responsible for doing so, etc.
  • What training is provided, whether it includes the specific areas where the misconduct occurred, what the content/effectiveness/format of the training is, etc.
  • How active the management has been in communicating about misconduct
  • Whether the company provides an autonomous and/or confidential reporting mechanism to report any breaches in the company’s code of conduct, how it investigates these complaints, how it ensures that these investigations are done objectively, etc.
  • Whether due diligence is done with respect to third-party relationships, mergers, acquisitions, etc.

Is The Program Adequately Resourced And Empowered?

Prosecutors are instructed to determine whether a compliance program is a “paper program“ or actually implemented so as to be effective. In doing so, the following criteria are taken into account:

  • Commitment by middle and senior management: including what types of actions they are taking to provide model behavior to employees
  • Are those who are tasked with compliance also provided with sufficient seniority, resources, staff, and autonomy from management? Do they have the appropriate experience and qualifications for their roles and responsibilities?
  • Are there proper incentives and disciplinary measures for compliance and noncompliance? Who participates in disciplinary decisions? Is the same process used for every instance of misconduct; if not, why? Are disciplinary actions and incentives consistently and fairly applied to everyone?

Does The Program Work In Practice?

Evaluating the effectiveness of the compliance program at the time of the offense is reportedly one of the most difficult issues prosecutors must confront in this process. In doing so, they are instructed to consider how misconduct was detected and whether the company undertook an adequate and honest root cause analysis in order to understand what contributed to it, as well as what is needed to prevent it from happening again. This includes, for example, looking at whether the company invested in control systems, reviews, employee surveys, internal audits, revisions to the program in light of lessons learned, monitoring, and more.

Contact A White Collar Criminal Defense Attorney With Any Questions Or Concerns

The updated guidelines make it clear that simply having a compliance program in place is not enough; it needs to be updated and enforced thoroughly as well. As a result, it is advisable for companies to consult with white collar crime experts in advance of any and all investigations and/or audits in order to ensure that they are in compliance with these guidelines and avoid potential penalties.

At The Baez Law Firm, we have years of experience defending clients facing a broad range of high-profile white collar criminal charges, and can provide the level of guidance you need for that peace of mind, knowing that your compliance program won’t be subject to penalties as the result of a criminal investigation. Contact our Orlando white collar crime attorneys today to find out more.





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