Deputy AG Lisa Monaco suggests major changes to justice ministry enforcement efforts | Michael volkov
[guest-author: Alex Cotoia]
Alex Cotoia, Regulatory Officer at Volkov Law Group, joins us for an article providing additional color to US Deputy Attorney General Lisa Monaco’s recent announcement on DOJ policy changes.
On October 28, 2021, U.S. Deputy Attorney General Lisa O. Monaco, a public service veteran in previous administrations and champion of corporate accountability, announced several significant changes to current Justice Department policies (” MJ ”). As Mike summed it up recently, these changes have far-reaching implications for the compliance functions of all organizations.
In brief introductory remarks to the 36 of the American Bar Association (“ABA”)e National Institute on White Collar Crime, Monaco noted that she had spent some time “examining the current law enforcement landscape” since returning to the Department of Justice in April 2021. Among other things, she has concluded that corporate crime and actions that undermine the national security interests of the United States increasingly intersect, as in the case of cyber attacks launched by foreign attackers who exploit computer vulnerabilities to access and / or manipulate information, and the case of companies that blatantly violate US economic sanctions and export control regulations. While Monaco noted that these changes were largely “of degree and not of nature,” she reiterated DOJ’s commitment to “vigorously enforce the criminal laws that govern companies, executives, officers and others, in order to protect jobs, keep savings and maintain [the public’s] collective faith ”in a free, well-regulated, price-driven market economy.
The three (3) main policy changes that Monaco announced regarding: (1) individual (not just institutional) liability for malpractice are relevant to compliance professionals in particular; (2) the issuance of new guidelines that significantly expand prosecutorial discretion by allowing DOJ staff to consider all past wrongs of an organizational offender; and (3) a commitment to use corporate monitors more regularly “whenever appropriate”.
Regarding individual responsibility, Monaco insisted that the policy of the Ministry of Justice under the leadership of Attorney General Merrick Garland begins with those ultimately responsible for the underlying criminal act. While stressing that cases against corporate executives can often be difficult to prosecute, Monaco nonetheless reiterated, echoing the Principles of Federal Prosecutions– that fear of losing should not dissuade prosecutors from holding leaders and senior officials responsible for their criminal acts. Therefore, the DOJ reinstated previous guidelines (repealed in recent years) requiring all organizations seeking co-op credit to disclose all of the “characters” involved in the underlying program and produce all relevant non-privileged documents relating to these persons. people. As Monaco has pointed out, the obligation to produce this information is no longer limited to persons considered to have been “substantially involved” in the reprehensible behavior. Such a limitation, Monaco noted, not only ignores the fact that individuals “peripherally” involved in misconduct may have valuable information for federal agents and prosecutors, but also leaves companies “too much leeway to decide who should and should not be disclosed to the government ”. Thus, organizations must now identify all the individuals — regardless of their position, status or seniority — who are involved in the alleged misconduct.
Second, Monaco announced a radical change in the policy of the Ministry of Justice which now requires prosecutors to take into account the full panoply of historical misconduct associated with a repeat offender. As an illustration of this point, Monaco noted, for example, that in examining whether an organization has violated the FCPA, a prosecutor should also explore the organization’s execution history. As Monaco hypothetically reiterated, this would include determining whether the same organization has violated federal tax laws, environmental and natural resource regulations, money laundering bans, and other federal laws and regulations. Whereas previously the review of the organizations’ past misconduct was limited to the area of immediate concern, the Department of Justice will now examine the organization’s entire criminal, civil and regulatory history to decide on the most appropriate resolution. for the criminal conduct involved. Basically, DOJ’s new policy seeks to “harmonize” the treatment of individuals and organizations under federal law. More importantly, however, the policy underscores the need for organizations to take all of their compliance obligations seriously.
Monaco further announced a reversal of the implicit DOJ policy which allegedly disadvantaged the use of corporate monitors in the resolution of criminal actions against organizations. Under the new leadership of the Ministry of Justice, independent corporate auditors – selected on an objective basis that have not yet been established by the Ministry of Justice – will be used more regularly as collateral to ensure that offenders the most risky “are up to [their] Compliance and Disclosure Obligations ”under a Deferred Prosecution Agreement (“ DPA ”) or Non-Prosecution Agreement (“ NPA ”). Likewise, Monaco noted that the DOJ would aggressively prosecute organizations that used the leniency offered by pre-trial diversion to continue committing crimes. As such, Monaco said the DOJ would aggressively prosecute these companies with “serious consequences” imposed for violating the explicit terms of a DPA or NPA. As an example, Monaco reported two (2) recent notifications of violation issued by the DOJ to multinational companies that violated the terms of their respective agreements with the DOJ.
Monaco’s announcement is not surprising given his previous experience as a federal prosecutor and his significant involvement in the private sector. As we predicted in a podcast back when Garland and Merrick took office, businesses might expect more consistency in federal enforcement efforts aligned with the Biden administration’s goal of flushing out bribery and corruption internationally and refocusing misappropriated resources. by the previous administration to ensure that companies comply with the letter of the law.
The bottom line is that the happy days of lax enforcement by the DOJ and other key federal regulators have come to a swift conclusion. As compliance professionals have reiterated for years, compliance is seen as an integral business function of an organization that deserves special attention, appropriate resources, and the autonomy to detect and deter potential violations of the law. Organizations of all shapes and sizes operating in all sectors of the economy should take advantage of the latest DOJ announcement by re-examining their risk assessments, internal controls, policies and procedures, and perhaps most importantly, their cultures. organizational.