USA Trends and Developments Contributed by: Steve Spiegelhalter and Bridget Johnson, Alvarez & Marsal
In parallel with the whistle-blower rewards programme, the DOJ amended its Corporate Enforcement and Voluntary Disclosure (VSD) policy. Under the revised policy, companies that voluntarily disclose misconduct within 120 days – whether prompted by a whistle-blower com - plaint or internal findings – enjoy a presumption of declination, meaning they are less likely to face criminal charges, even if the misconduct has already been reported to the DOJ by a whis - tle-blower. Compliance as a key factor shaping criminal resolutions In recent years, compliance has evolved into a primary factor shaping the resolution process. US regulators have increasingly considered their targets’ compliance programmes – both when the misconduct happened and as the pro - gramme existed at the time of resolution – when deciding whether to pursue charges or civil pen - alties, as well as the severity of those penalties. For companies with well-established, actively managed compliance programmes, the DOJ has shown a greater willingness to reduce penalties or offer more favourable resolutions, including, in some cases, avoiding charges altogether. On the other hand, companies that fail to take compli - ance seriously – whether by maintaining weak programmes or failing to remediate misconduct – face more substantial penalties and, in some cases, the imposition of corporate monitors. This trend toward emphasising compliance in resolutions is consistent with the administra - tion’s broader objective of incentivising compa - nies to invest in systems that deter misconduct before it happens. By tying the effectiveness of compliance programmes to enforcement out - comes, the DOJ aims to create stronger incen - tives for companies to self-police and invest in long-term corporate integrity.
The year 2024 has seen a clear continuation of these trends. The DOJ’s Fraud Section issued two Corporate Enforcement Policy declina - tions in the last year. Both declination letters cited specific substantial improvements to the companies’ compliance programmes, includ - ing “significant investment in designing, imple - menting, and testing a risk-based and sustain - able compliance program” and “formalizing employee training and vendor/client screening protocols”, among reasons for the declinations. Companies that already have a robust compli - ance programme in place or quickly and credibly remediate during the government’s investiga - tion often win a better resolution. Even when a company cannot avoid prosecution altogether, it can avoid an independent monitor by re-evalu - ating and improving its compliance programme. One such company recently entered a deferred prosecution agreement and avoided a monitor because it engaged in timely remedial measures, including “reviewing, enhancing, and testing its broader internal controls for pricing and other transactions with the assistance of a forensic accounting firm.” On the other hand, the DOJ has cited deficien - cies in the company’s compliance programme as a reason to impose large penalties and require an independent compliance monitor. In a landmark and widely reported USD1.8 billion settlement with a large bank, the DOJ said the company’s “pervasive and systematic failure to maintain an adequate AML compliance program” con - tributed to the harsh penalty. Additionally, in an October 2024 Deferred Prosecution Agreement with a major defence contractor found to have violated the FCPA, False Claims Act, and Inter - national Traffic in Arms Regulations (ITAR), the DOJ stated that the company required a monitor because “certain of the Company’s compliance
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