On April 30, 2019, the US Department of Justice (“DOJ”) Criminal Division announced the publication of an updated guidance document to assist prosecutors in evaluating corporate compliance programs. This updated guidance is intended to better harmonize the guidance with other Criminal Division guidance and standards and to provide additional context for analysis of compliance programs.
The guidance document, entitled “Evaluation of Corporate Compliance Programs,” identifies three “fundamental questions” that prosecutors may use to evaluate a compliance program. These questions are:
- Is the corporation’s compliance program well designed?
This question is intended to address whether the compliance program is “adequately designed for maximum effectiveness in preventing and detecting wrongdoing,” and whether the program is being enforced. Prosecutors are to consider various factors, including a risk assessment, policies and procedures, training and communications, confidential reporting structure and investigation process, third-party management, and mergers and acquisitions.
- Is the corporation’s compliance program being implemented effectively?
This question is intended to address whether the compliance program exists only as a “paper program,” or if it is one “implemented, reviewed and revised, as appropriate, in an effective manner,” whether the program is sufficiently staffed, and whether employees are adequately informed about the program.
- Does the corporation’s compliance program work in practice?
This question is intended to address whether the compliance program was adequate and effective at the time of the offense, as well as at the time of a charging decision. The guidance notes that the existence of misconduct is not a prima facie indication that a compliance program “did not work or was ineffective at the time of the offense.”
In announcing the new guidance, Assistant Attorney General Brian Benczkowski noted that “[e]ffective compliance programs play a critical role in preventing misconduct, facilitating investigations, and informing fair resolution.” Benczkowski added that the updated guidance is part of a broad effort in hiring, training and enforcement to promote corporate behaviors that benefit the public, and to ensure that prosecutors evaluate compliance programs in a “rigorous and transparent manner.”
This new guidance follows a separate memorandum that Benczkowski issued in October 2018, which could curtail the use of compliance monitors in settlement agreements. In that memorandum, Benczkowski noted that compliance monitors “will not be necessary in many corporate criminal resolutions,” and further instructed prosecutors to consider the “cost of a monitor and its impact on the operations of a corporation.” Some observers think this signals a more business-friendly approach to compliance enforcement.05