DOJ Criminal Division announces Revised Corporate Enforcement Policy

Date: 01/17/2023

On January 17, 2023, Assistant Attorney General (AAG) for the U.S. Department of Justice (DOJ) Criminal Division Kenneth Polite announced the “first significant changes” to the Criminal Division’s Corporate Enforcement Policy (CEP) since 2017. AAG Polite’s remarks come roughly four months after Deputy Attorney General (DAG) Lisa Monaco’s speech, calling for all DOJ components to reexamine their voluntary self-disclosure (VSD) policies and “to 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.” According to AAG Polite, the Criminal Division “took the DAG’s call as an opportunity to reassess and strengthen” its existing policies. The revised CEP, which “applies to all corporate criminal matters” handled by the Criminal Division, offers companies “new, significant, and concrete incentives to self-disclose misconduct,” and even where companies do not self-disclose, incentivizes “companies to go far above and beyond the bare minimum when they cooperate” with DOJ investigations.

One major issue with the previous CEP, which the revised CEP aims to address, was its failure to incentivize self-disclosure of potential wrongdoing where a company’s internal investigation uncovered potential aggravating circumstances. AAG Polite acknowledged that, under the prior version of the CEP, “in many situations, companies that [had] identified potential wrongdoing and [were] weighing whether to self-disclose” would opt not to file a VSD due to the concern “that an aggravating factor may prevent a company from obtaining a declination.” Under the previous CEP, “that concern may have led companies and their outside counsel to conclude… that it is more prudent not to disclose the misconduct.” Now, under the revised CEP, companies in such a situation are presented with an alternative “path” that “incentivizes robust compliance on the front-end, to prevent misconduct, and requires even more robust cooperation and remediation on the back-end, if a crime occurs.”

Under the revised CEP, “even if aggravating circumstances are present, although a company will not qualify for a presumption of a declination… prosecutors may nonetheless determine that a declination is the appropriate outcome,” if the company can demonstrate the following:

  1. The VSD was made immediately upon the company becoming aware of the alleged misconduct;
  2. At the time of the alleged misconduct and VSD, the company had an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the company’s VSD; and
  3. The company provided extraordinary cooperation with DOJ’s investigation and undertook extraordinary remediation.

Some but not all companies will be able to “overcome the aggravating factors and receive a declination with disgorgement by meeting these criteria.” Under the revised CEP, in situations where a company “voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates, but a criminal resolution is still warranted,” the Criminal Division “will now accord, or recommend to a sentencing court, at least 50%, and up to 75% off the low end of the U.S. Sentencing Guidelines fine range, except in the case of a criminal recidivist,” and “will generally not require a corporate guilty plea—including for criminal recidivists—absent multiple or particularly egregious aggravating circumstances.”

In cases where companies do not file a VSD but still fully cooperate and timely and appropriately remediate, the revised CEP provides that “the Criminal Division will recommend up to a 50% reduction off of the low end of the Guidelines fine range” – twice the maximum amount of reduction that was available under the previous CEP. However, such a 50% reduction, AAG Polite emphasized, “will be reserved for companies that truly distinguish themselves and demonstrate extraordinary cooperation and remediation.” By providing additional incentives for companies to voluntarily self-disclose, cooperate and remediate, the revised CEP aims to “take a nuanced but tough approach,” striking the appropriate balance between vigorous and fair corporate criminal enforcement.