US DOJ Criminal Division announces revisions to
Corporate Enforcement Policy

On January 17, Assistant Attorney General for the Criminal Division Kenneth A. Polite, Jr. announced the first revisions to the Department of Justice Criminal Division's Corporate Enforcement Policy (CEP) since its inception in November 2017. The revisions follow Deputy Attorney General Lisa Monaco's September 2022 demand that all DOJ components create voluntary self-disclosure policies, and "clarify the benefits of promptly coming forward to self-report, so that chief compliance officers, general counsels, and others can make the case in the boardroom that voluntary self-disclosure is a good business decision." The CEP applies to all matters handled by the Criminal Division, including the Foreign Corrupt Practices Act (FCPA).

In an effort to entice companies to self-report potential criminal violations quickly, the revisions emphasize that, even with the existence of so-called aggravating factors, the Criminal Division may now decline to prosecute a company which (1) voluntarily self-discloses immediately upon becoming aware of an allegation of misconduct; (2) maintained an effective compliance program and internal accounting controls at the time of the alleged misconduct, which led to the discovery of it and (3) provided "extraordinary cooperation" with DOJ's investigation and undertook "extraordinary remediation." The revised CEP is designed to incentivize companies to "take compliance and good corporate citizenship seriously."

This is a significant shift from the original CEP which presumed a declination for companies that voluntarily self-disclosed, fully cooperated and made timely remediation, unless there were certain aggravating circumstances. Such circumstances included misconduct by senior executives, significant profits from the wrongdoing and egregious or pervasive misconduct. While declinations are now possible in the face of aggravating circumstances, the hurdles are still high and not precisely defined. For example, how quickly must a company self-report to be considered "immediate"? How does one demonstrate "extraordinary cooperation"—according to AAG Polite, it must be beyond even "gold-standard" cooperation.

Even where a criminal resolution is necessary against a company that takes such "extraordinary measures before, during, and after" a DOJ investigation, the revised CEP allows prosecutors to recommend any such penalty be reduced by 50 to 75 percent. The former CEP limited the maximum reduction in such instances to 50 percent off the applicable fine range.

Companies that do not voluntarily self-disclose yet "still fully cooperate and timely and appropriately remediate" can receive benefits under the revised CEP. Specifically, the Criminal Division may provide as much as a 50 percent reduction in the penalty, twice that available under the prior version of the CEP.

Ultimately, the revised CEP underscores the importance of having a robust and well-functioning compliance program. An effective compliance program significantly reduces the chances of being exposed to potential criminal prosecution, and without such a program, it is unlikely that a company will be able to take advantage of the benefits of the CEP.