On May 12, the Criminal Division of the U.S. Department of Justice (DOJ) issued a series of changes in its white collar enforcement priorities. These changes were announced in the Criminal Division Enforcement Plan, the Criminal Division Corporate Enforcement Policy and the DOJ Whistleblower Awards Pilot Program, along with a memorandum outlining the use of monitors.
Key Developments
- Expansion of Whistleblower Incentives
DOJ announced an expansion of its pilot whistleblower program to include a broader range of corporate misconduct: (1) transnational criminal organizations, including money laundering and narcotics; (2) immigration violations; (3) corporate sanctions violations; (4) tariff evasion and customs fraud; (5) corporate procurement fraud (particularly in the defense and health care spaces); and (6) violations involving material support of terrorism.
Tipsters may receive up to 30% of recovered government funds if their information leads to forfeitures exceeding $1 million. This initiative broadens the scope of the program beyond its original focus on financial crimes.
- Greater Clarity around Voluntary Self-Disclosure
DOJ has also attempted to provide great clarity and certainty around voluntary self-disclosure, long central to its corporate enforcement policy. Under the new policy, companies who report misconduct promptly, fully cooperate, and implement timely remediation—and have no aggravating factors—will receive a declination, not just a “presumption” in favor of a declination (as was previously the case). The change is intended to remove the concern that companies might lay bare their misconduct only to find that the investigations against them continue apace. The new policy makes clear that if the conditions are met, the declination will follow.
For companies that fall into the category of “near miss” self-disclosures, i.e., where they are ineligible for declination because the conduct (though disclosed in good faith) was already known to the government, or where aggravating factors were present, the new policy nevertheless provides incentive for self-reporting, stating that the company may (depending on the facts of the case) still be eligible to receive either a declination or another benefit such as a shorter non-prosecution agreement, a significant reduction off the low end of the fine range, and avoiding a compliance monitor.
- Reduction in Corporate Monitors
The boom in corporate monitors is effectively over. Under the previous administration, DOJ leadership encouraged greater use of corporate monitors in criminal resolutions, particularly where compliance programs were inadequate or untested. Now, however, prosecutors must justify the imposition of a monitor by considering specific factors and laying out detailed factual findings. For companies that made demonstrable investments in their compliance infrastructure, DOJ is now signaling it will be less inclined to impose an external monitor. What this means for companies: strong compliance programs—backed by real-time data, risk-based controls, and evidence of independence—may act as a shield against third-party oversight following a resolution.
- Reallocation of FBI and Prosecutorial Resources
Although the Trump Administration has already indicated a general shift in enforcement priorities, DOJ formalized this guidance and made clear that it will focus on crimes against U.S. taxpayers, investors, and customers, and crimes that harm U.S. national security interests.
What does that mean in practice? DOJ’s Criminal Division has directed prosecutors to prioritize cases involving health care fraud, trade and customs fraud, securities fraud cases involving Ponzi schemes, elder abuse or retail investors, and complex money laundering linked to national security risks, such as Chinese operations and transnational criminal groups. Prosecutors are instructed to deprioritize offenses such as public corruption and foreign bribery, which is no surprise given the pause in Foreign Corrupt Practices Act (“FCPA”) enforcement that we covered earlier this year [link to previous alert]. The FBI has also been directed to allocate approximately one-third of its agents’ time to immigration enforcement, meaning fewer white collar investigations overall.
Implications for Corporate Compliance
Companies should reassess their compliance programs to ensure they address both increased whistleblower incentives and the DOJ’s current priorities, particularly in areas such as health care and defense procurement fraud, trade violations, sanctions, and money laundering connected to national security risks.
With the expansion of the whistleblower program, companies should reassess internal reporting mechanisms and encourage employees to report potential violations internally so that any issues can be addressed proactively. Companies should also have a ready playbook for swift self-disclosure of any misconduct that surfaces and ensure that their compliance infrastructure is up to date and encourages a “speak up” culture.
