DOJ FCPA Guidance
- In early June 2020, the Department of Justice released new guidance on evaluating corporate compliance programs and the process for determining whether to make corporate charging decisions for FCPA violations.
- The Guidance focuses on the effectiveness of the company’s compliance program and, compared to earlier versions, includes an emphasis on responding to third-party risk, monitoring discipline to ensure consistency, and identifying factors to prioritize for effective compliance programs.
- Other highlights from the new Guidance include due diligence performance, using “lessons learned,” third-party management, and an emphasis on training.
- These differences and additions can be complex; consider hiring an attorney to clarify these evolving standards and resulting uncertainties.
Our FCPA Defense Team
If you are being investigated in connection with alleged FCPA violations or need advice regarding the DOJ’s new FCPA Guidance, contact our FCPA lawyers today.
The DOJ and its regulatory partner, the SEC, routinely investigate and prosecute individuals and companies suspected of violating the FCPA. It seeks to hold companies accountable for such violations through its aggressive enforcement tools.
Do not fall prey to a protracted FCPA investigation. You need an individualized defense strategy from an experienced and trained defense attorney.
At Oberheiden, P.C., our attorneys include former FBI agents, former U.S. attorneys, and former prosecutors. This inside perspective will allow you to receive the best strategic advice regarding how to proceed in your case.
Do not wait to get in touch with a qualified FCPA defense attorney today. Put Oberheiden, P.C. on your side to fight for your freedom, liberty, and reputation.
Overview of the DOJ’s June 2020 Guidance
In early June 2020, the DOJ published a new version of its guidance on evaluating compliance programs and determining whether to make corporate charging decisions for FCPA violations.
It is an important document because it notes the decision-making process of the DOJ and federal prosecutors in determining whether to bring an enforcement action against companies for violations of the FCPA. The focus of this inquiry is the effectiveness of the company’s compliance program.
This, in turn, helps the DOJ and prosecutors determine whether the company’s compliance program was effective at the time of the offense and charging decision or resolution for the purpose of determining the appropriate “(1) form of any resolution or prosecution; (2) monetary penalty, if any; and (3) compliance obligations contained in any corporate criminal resolution.”
In addition to the factors elaborated upon in detail below, the new Guidance includes a greater focus on third-party risk and responding to it, outlines whether the compliance program monitors discipline to ensure consistency, and identifies which factors companies should prioritize when evaluating the effectiveness of their compliance programs.
Highlights in the DOJ’s June 2020 Guidance
Below we provide selected examples of some of the most significant changes and important factors emphasized in the DOJ’s new guidance:
- Case-by-case determinations: The Guidance emphasizes that prosecutors are to make a “reasonable, individualized determination in each case” that considers various factors such as company size, industry, regulatory landscape, geography, and other internal and external operations that could have an effect on the company’s compliance program.
- Three fundamental questions: The Guidance notes that prosecutors must ask the following “fundamental questions:” (1) Is the corporation’s compliance program well designed?; (2) Is the program being applied earnestly and in good faith?; and (3) Does the corporation’s compliance program work in practice? In answering these three questions, prosecutors may evaluate performance on topics that the Criminal Division has found relevant in evaluating corporate compliance programs at the time of the offense and the time of the charging decision or resolution.
- General questions for the company’s compliance program: The Guidance requires prosecutors to inquire as to whether the company’s compliance program is a “paper program” or one that is one “implemented, reviewed, and revised, as appropriate, in an effective manner.” Prosecutors are also required to assess whether the company established certain policies and procedures that “incorporate the culture of compliance into its day-to-day operations.” Companies must further review their compliance programs to make sure it is not “stale.” It is suggested that companies survey its employees to determine the compliance culture and strength of the its controls.
- Subjective questions for the company’s compliance program: The Guidance notes that prosecutors should determine whether the company has a well-designed compliance program. The process for making this determination includes understanding how the company has identified and assessed its risk profile, why the company chose to set up its compliance program the way it did, and why and how the company’s compliance program has evolved over time.
- Due diligence performances: The Guidance observes multiple instances where companies need to employ due diligence. Compliance programs should apply risk-based due diligence to its third-party relationships. Compliance programs should also apply due diligence to any acquisition targets—pre-M&A due diligence is just as important as post-due diligence reviews.
- Using “lessons learned”: The DOJ emphasizes that companies need to be incorporating “lessons learned” into their compliance programs. Further, prosecutors are now asked to consider whether the company had incorporated revisions—the “lessons learned”—into their compliance program.
- Data Resources and Access: This section asks whether the company’s compliance and control personnel have sufficient access to data to allow for timely and effective monitoring and testing of policies as well as whether there are any impediments to access these sources of data.
- Third-Party Management: The Guidance asks whether a company’s third-party management corresponds to the nature and level of the company’s identified risks as well as how this process has been integrated into the management process. Prosecutors should assess a company’s third-party management in determining whether the company’s compliance program is able to detect types of misconduct that are likely. Regarding the management of relationships, companies should be asked whether they engage in risk management of its third parties throughout the lifespan of the relationship or primarily during the onboarding process.
- Training: The Guidance notes that prosecutors are required to examine whether the program is disseminated to and understood by employees in order to determine whether the compliance program is “truly effective.” Further, when evaluating training, prosecutors should assess whether the company relays information in a way that is tailored to the company’s audience size, sophistication, or subject matter expertise.
All these updates underscore the need for continuous monitoring, compliance, and risk assessment for companies.
While the Guidance is complex, it is the companies themselves that are charged with the responsibility of implementing their own compliance programs.
Need Advice Regarding DOJ FCPA Guidance?
The new June 2020 Guidance is a decision-making compilation of the DOJ and prosecutors’ procedures for evaluating companies. It is a complex set of procedures for companies to follow to maintain adequate compliance programs.
The new Guidance is important because companies get to analyze how the DOJ and prosecutors make their decisions regarding charging companies for violations of the FCPA. However, this is only as good as the ability to comprehend and implement best practices and responses.
Experienced counsel can help your company evaluate its existing compliance program and structure in light of current identified and forecasted risks.
At Oberheiden, P.C., our attorneys are competent in handling all issues regarding corporate compliance programs and are knowledgeable about the changes—including the differences from the prior versions and additions—reflected in the new DOJ Guidance on evaluating corporate compliance programs.
If you need advice regarding the DOJ FCPA Guidance, call us at 888-680-1745 or contact our office for a free consultation.