Action Item: The U.S. Department of Justice Criminal Division, Fraud Section (“DOJ”), recently published new guidance on corporate compliance programs. All corporate counsel, officers, and directors should be aware of this guidance, and corporate compliance professionals should ensure not only that compliance policies follow this guidance, but that actual practices meet the expectations outlined by DOJ.

On February 8, 2017, DOJ published guidance entitled, “Evaluation of Corporate Compliance Programs,”¹ which “provides some important topics and sample questions that the Fraud Section has frequently found relevant in evaluating a corporate compliance program.” This is important information for every business to be aware of, and this guidance is particularly interesting because it is the first formal guidance issued by DOJ under the Trump administration and Attorney General Jeff Sessions.

Federal prosecutors are guided by factors set forth in, “The Principles of Federal Prosecution of Business Organizations,” in the United States Attorneys’ Manual² when determining whether to bring criminal charges against a corporate entity. Among these so-called “Filip Factors” are “the existence and effectiveness of the corporation’s pre-existing compliance program,” and the corporation’s remedial efforts “to implement an effective corporate compliance program or to improve an existing one.”³

DOJ’s new compliance guidance sets forth 11 high-level topics. The topics are compiled from other resources, including the United States Attorneys’ Manual; the United States Sentencing Commission’s Guidelines Manual; DOJ’s November 2012 publication, A Resource Guide to the U.S. Foreign Corrupt Practices Act; and the Organization for Economic Co-operation and Development Council’s 2013 publication, Anti-Corruption Ethics and Compliance Handbook for Business; among others.

The 11 high-level topics in the guidance are:

1. Analysis and Remediation of Underlying Conduct
2. Senior and Middle Management
3. Autonomy and Resources
4. Policies and Procedures
5. Risk Assessment
6. Training and Communications
7. Confidential Reporting and Investigation
8. Incentives and Disciplinary Measures
9. Continuous Improvement, Periodic Testing, and Review
10. Third Party Management
11. Mergers and Acquisitions

Under each of these 11 topics, DOJ’s guidance sets forth multiple sample questions that prosecutors are likely to probe into during an investigation. A few examples are:

• Analysis and Remediation of Underlying Misconduct: Were there prior opportunities to detect the misconduct in question, such as audit reports identifying relevant control failures or allegations, complaints, or investigations involving similar issues?
• Senior and Middle Management: How has senior leadership modelled proper behavior to subordinates?
• Risk Assessment: What methodology has the company used to identify, analyze, and address the particular risks it faced?li>
• Training and Communications: What training have employees in relevant control functions received? Has the company provided tailored training for high-risk and control employees that addressed the risks in the area where the misconduct occurred?
• Confidential Reporting and Investigation: How has the company collected, analyzed, and used information from its reporting mechanisms?

1. U.S. Department of Justice, Criminal Division, Fraud Section, “Evaluation of Corporate Compliance Programs,” available at www.justice.gov/criminal-fraud/page/file/937501/download.
2. U.S. Attorneys’ Manual § 9-28.000, available at www.justice.gov/usam/usam-9-28000-principles-federal-prosecution-business-organizations.
3. Id. § 9-28.300, available at www.justice.gov/usam/usam-9-28000-principles-federal-prosecution-business-organizations#9-28.300.