The Urgency of Ethics and Compliance – The Biden Administration and Enforcement

Michael Volkov

The Volkov Law Group

The Biden Administration has a lot on its plate – that is obvious.  Tackling the COVID-19 pandemic and restoring economic growth is one of the most difficult challenges ever facing our country.  Across the government, a new administration poses significant changes in priorities.

The Justice Department will be tough on corporate crime and compliance.  With the exception of a failure to prosecute individuals responsible for the financial crisis in 2008, prior Democratic Administrations have a record of aggressive prosecution of white collar crime. Financial institutions, energy companies, healthcare providers, and drug and device companies will face increased regulatory scrutiny and DOJ civil and criminal enforcement.  Criminal prosecution of export controls and sanctions cases are likely to increase as well, given the importance of export and sanctions compliance to foreign policy objectives. 

A DOJ focus on COVID-19 pandemic issues will continue with an increased emphasis on health and safety violations.  COVID-19 fraud relating to the Paycheck Protection Program will be a continuing priority. False Claims Act cases will increase significantly given the federal spending increase and a heightened interest in pursuing healthcare fraud cases.

Individual criminal cases will increase as well. The Yates Memorandum was issued in 2015 during the Obama Administration. The focus on individual prosecution continued during the Trump Administration, with a continuing increase in individuals prosecuted for healthcare and FCPA violations.

In this environment, companies should redouble their efforts to implement an effective ethics and compliance program.  The Justice Department and the Treasury Department have provided extensive guidance on ethics and compliance programs.  The Justice Department’s Criminal and Antitrust Divisions issued comprehensive guidance on ethics and compliance programs.  The SEC and the DOJ issued updated FCPA compliance guidance.  The Treasury Department’s Office of Foreign Asset Control (OFAC) issued guidance for trade sanctions compliance programs.

The Justice Department is pushing companies to elevate the importance of ethics and compliance programs with an emphasis on corporate culture, risk assessments, the independence and authority of chief compliance officers, internal investigations and root cause analysis, continuous monitoring and improvements, and allocation of resources to ethics and compliance programs.

The Biden Justice Department will aggressively prosecute criminal offenses against companies and culpable individuals in high-priority areas.  To the extent that these companies have ignored the importance of ethics and compliance programs as a means to prevent and detect potential violations, DOJ will double down on the importance of ethics and compliance programs.  Slowly but surely, what is characterized as “guidance” will become a set of basic requirements for companies and individual compliance.

Companies should respond proactively by refreshing their compliance programs, identifying priorities, and setting a timetable of action items.  DOJ and OFAC guidance establish a convenient framework for analysis and assessment.  With the continuing restrictions caused by COVID-19, companies have to conduct a flexible analysis that builds in progress in reduction of the pandemic.  While it is hard to characterize the future as a “return to normal,” the impact of COVID-19 will be felt for years and companies have to adapt to this by proactively building a nimble ethics and compliance program.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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Michael Volkov

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