If it seems like there is a new announcement every few weeks from the federal government about corporate compliance programs, it is because there is. Both the Department of Justice (“DOJ”) and the Office of Foreign Assets Control (“OFAC”) have recently released multiple sets of guidance re-emphasizing the importance they put on corporations implementing, maintaining and enforcing effective compliance programs. Here we focus on four recent initiatives in varied substantive arenas which we think demonstrate that the DOJ and OFAC continue to expect companies to maintain robust, broad-based programs, and consider the implementation of such programs in deciding whether and how to award “cooperation credit,” something which can be of immense value in difficult
First, on April 30, 2019, the DOJ renewed its emphasis on effective compliance programs with its guidance directing prosecutors on how to evaluate corporate compliance programs. This guidance builds on earlier policies and explains that prosecutors should consider three primary issues when evaluating a compliance program: (1) whether the program is well-designed; (2) whether the program is effectively implemented; and (3) whether the compliance program works in practice. The guidance further discusses several factors that prosecutors consider in evaluating compliance programs, including the efforts that the company has made to implement policies that reflect the company’s risks as well as changes to the legal and regulatory landscape.
Shortly thereafter, the DOJ issued specific guidance on civil False Claims Act matters (the act which provides remedies for fraud committed against the U.S.) – again emphasizing the importance of a robust,
functioning compliance program. Under this guidance, the DOJ will consider cooperation efforts and corrective actions undertaken by a company in response to a False Claims Act investigation in determining whether to award “cooperation credit.” Such measures that the DOJ considers include whether the company undertook a “thorough analysis of the root cause of the misconduct, appropriately disciplin[ed] or replac[ed] those responsible for the misconduct, accept[ed] responsibility for the violation and implement[ed] or improv[ed] compliance programs to prevent a recurrence.” See DOJ May 2019 News Release. Further, DOJ indicated that a company may receive cooperation credit in False Claims Act cases if the company voluntarily discloses misconduct unknown to the government, even if an investigation is ongoing.
At the same time, OFAC, the agency responsible for enforcing economic sanctions, published its own guidance encouraging sanctions compliance programs. While a sanctions compliance program is not required by law, the existence of a program may mitigate civil monetary penalties and companies that do not maintain a sanctions compliance program do so at their own peril. Moreover, the guidance warned that OFAC intends to impose penalties on supervisory, managerial and executive-level individuals who violate their own companies’ sanctions compliance programs.
Finally, and most recently, the DOJ announced on July 11, 2019 that it will begin to consider the existence of an effective compliance program at the time the DOJ is deciding whether to bring criminal charges for antitrust violations. This is a departure from past policy that avoided giving companies credit at the charging stage simply because of the existence of a compliance program. The new policy, however, “recognizes the progress . . . in antitrust awareness” and is designed “to encourage companies to further invest in compliance efforts.” This is yet another reminder of the importance of effective compliance programs.
Each of these recent releases serve as a reminder of the importance of proactively establishing and enforcing corporate compliance programs. To avoid potentially costly
internal investigations, monetary penalties or criminal charges, DOJ and OFAC expect companies to constantly monitor and update their compliance programs and integrate guidance published by government agencies, something Calfee has experience in doing. If you would like assistance in developing or implementing a compliance program, we can help.