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DOJ Publishes Guidance on Best Practices for Compliance Programs

On February 8, 2017, just as the new Attorney General Jeff Sessions was confirmed by the U.S. Senate, the Fraud Section of the U.S. Department of Justice (DOJ) issued a memorandum setting forth factors by which the DOJ will evaluate corporate compliance programs when determining whether to investigate, charge, or resolve criminal allegations against an organization under Title 9 of the U.S. Attorneys' Manual (USAM). See U.S. Dep't Of Justice, Criminal Division, Fraud Section, Evaluation of Corporate Compliance Programs (attached). Largely, the memorandum builds on and clarifies existing guidance under Title 9 of the USAM and Chapter 8 of the U.S. Sentencing Guidelines. It also draws on the joint DOJ and U.S. Securities and Exchange Commission Resource Manual on the Foreign Corrupt Practices Act, as well as materials on corporate ethics and compliance infrastructure prepared by the private Organization for Economic Cooperation and Development.

It is hard to know whether the release may signal focus and commitment by the new administration, or if it is simply a holdover from the prior administration. Ultimately, however, the memorandum is another tool that can be used by compliance professionals in the implementation, evaluation or expansion of internal corporate compliance programs to successfully prevent or mitigate circumstances that may otherwise lead to corporate criminal liability.

The memorandum cautions organizations that it is not designed as a prescriptive or formulaic checklist that will apply to every matter or every organization. While the document incorporates the experience of the Fraud Section, it emphasizes that DOJ will continue to make an "individualized determination" when assessing a compliance program in the context of its criminal enforcement discretion. It lists eleven factors that DOJ will consider when assessing a corporate compliance program:

  • the company's analysis of the root cause of the misconduct at issue, prior indicators of the misconduct, and steps taken to remedy the misconduct;

  • the response of senior and middle management to the misconduct and their effort to ensure the company demonstrates compliant behavior;

  • the autonomy and resources provided to the company's compliance department;

  • the compliance policies and procedures implemented by the company and the company's integration of those policies and procedures into its daily operations;

  • the company's approach to risk assessment;

  • compliance-related training and the company's dissemination of compliance materials and principles to employees;

  • the effectiveness of internal reporting and investigations;

  • the disciplinary measures and incentives implemented by the company with respect to compliance issues;

  • the use of internal audits, control testing, and other measures to continuously improve the compliance department;

  • the company's application of its compliance measures to third parties working with the company; and

  • the company's due diligence activities taken during mergers and acquisitions.

Effective compliance programs and compliance-related elements of environmental management systems require ongoing evaluation and improvement; the DOJ's new memorandum sets forth a roadmap to government expectations regarding such programs or system elements to prevent or address potential malfeasance. Although this guidance was set forth by DOJ's Fraud Section, other sections of DOJ will consider similar questions when evaluating corporate compliance programs based on existing and generally applicable policies. Consequently, even in the wake of a change in administration, companies can look to the memorandum's guidance to create, implement, and improve their compliance infrastructure.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume VII, Number 55
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About this Author

Katie Barajas, Katten Law Firm, Environmental and Workplace Safety Attorney
Associate

Katherine V. Barajas is an associate in the Environmental and Workplace Safety practice. Katie focuses her practice on environmental criminal and civil litigation and internal investigations, representing both corporations and individuals in white collar criminal cases. Her experience includes responding to investigations in the immediate aftermath of environmental incidents, witness interviews, and document review and production.

Katie has assisted clients in responding to investigations by the US Environmental Protection Agency, US Coast Guard...

202-625-3716
Anne M. Carpenter, Katten Muchin, Environmental Matters Lawyer, White Collar Crime Attorney,
Associate

Anne M. Carpenter concentrates her practice on environmental and white collar law, with an emphasis on civil and criminal environmental enforcement including investigations.

Prior to entering the field of law, Anne worked as an environmental educator for the New York City Soil and Water Conservation District, where she directed programs for high school and elementary school students in Harlem and across New York's five boroughs.

While in law school, Anne was an editor for the Pace Environmental Law Review, a member of the Pace Environmental Litigation Clinic, and served as a research assistant for the Pace Land Use Law Center.

202.625.3573
Associate

Johnjerica Hodge concentrates her practice on appellate litigation, white collar criminal defense, environmental litigation and internal investigations. She has experience representing clients in a wide range of civil matters.

Prior to joining Katten, Johnjerica served as a clerk for Chief Judge Carl E. Stewart of the US Court of Appeals for the Fifth Circuit. During law school, she contributed to and was a member of the Alabama Law Review. She also interned in the Federal Tort Claims Act Litigation Section of the US Department of...

202-625-3710
Steven P. Solow, Katten Muchin, Environment Workplace Safety lawyer
Partner

Steven P. Solow is co-head of Katten's Environmental and Workplace Safety practice and co-head of the White Collar, Investigations and Compliance practice in the firm's Washington, DC office. Steve is also a member of Katten's Board of Directors and the Executive Committee. He focuses his practice on business crimes, internal investigations, corporate compliance and security programs and environmental civil and criminal litigation. He represents and counsels corporations and business associations regarding their legal and regulatory obligations, develops integrated...

202-625-3550
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