Monaco Doubles Down: Deputy Attorney General Re-Emphasizes Corporate Crime Enforcement With Focus on National Security, Self-Reporting, and Compensation Incentives

Deputy Attorney General Lisa Monaco kicked off day two of the ABA White Collar Crime Conference in Miami by doubling down on DOJ’s corporate crime enforcement efforts. Monaco announced that DOJ will surge resources to address the nexus between corporate crime and national security issues. Monaco stressed that, in our uncertain global geopolitical environment, corporate crime poses an ever greater threat to our nation’s security.

In response to these challenges, Monaco announced that DOJ is restructuring its national security division, with plans to add 25 new prosecutors, including the first-ever Chief Counsel for Corporate Enforcement. The division will focus on efforts to evade sanctions and other national security-related crimes. Monaco also announced that DOJ will issue joint advisories with the Commerce and Treasury Departments regarding national security priorities and trends. The hope is that the advisories will provide guidance to companies on how to comply with federal law. Monaco also reiterated her prior statements that, since Russia’s invasion of Ukraine, “sanctions are the new FCPA” and advised that sanctions and export control should be at the top of every company’s risk compliance chart.

In addition to these national security points, Monaco re-emphasized DOJ’s focus on preventing corporate misconduct through policies that empower companies to invest in compliance and culture. Monaco advised corporations that when it comes to corporate crime “an ounce of prevention is worth a pound of cure,” and that she wants every general counsel, compliance officer, corporate executive, and board member to know that, when criminal misconduct is discovered, the best course of conduct involves prompt and voluntary self-disclosure to DOJ.

During a short Q&A session with former Assistant Attorney General Leslie Caldwell, when asked how self-reporting to DOJ might impact treatment of the company by another agency conducting a related investigation, such as the SEC, Monaco conceded that the effect of self-reporting presented a “harder question.” She emphasized that the DOJ consulted with the SEC in developing its new self-reporting policy. Monaco also recognized that it can be a difficult decision for corporations to self-disclose, and that doing so might take some digging into the facts and circumstances of the particular case, including any privilege issues involved. But, she stressed that companies will be better off the sooner they self-disclose and urged companies to have a full remediation story to tell.

Monaco also teased an upcoming announcement from Assistant Attorney General Kenneth Polite of a pilot program that will encourage corporations to incentivize compliance by tying compliance with individual compensation benchmarks, such as bonuses (both for executives and wrongdoers), and encourage corporations to claw-back money from culpable executives and employees. The DOJ hopes the pilot will help shift the financial burden from shareholders to the individuals responsible for the misconduct, who Monaco emphasized would always be the most important focus of DOJ’s corporate criminal enforcement efforts. Recognizing the difficulty of claw-back actions, Monaco stated that companies that make efforts to recoup compensation would receive credit even if those efforts are ultimately unsuccessful.

We will be continuing our coverage of the ABA White Collar Conference throughout the day. Stay informed by following Enforcement Edge.

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