On April 30, 2019, the Department of Justice (DOJ) Criminal Division issued an updated version of the “Evaluation of Corporate Compliance Programs” guidance originally published by the Criminal Division’s Fraud Section in February 2017. The update is more of a consolidation of various compliance program evaluation sources under the broader Criminal Division umbrella than a sweeping change in policy or philosophy, but there are some practical takeaways.

In announcing the release, Assistant Attorney General Brian A. Benczkowski noted that the revised guidance is intended to “better harmonize the prior Fraud Section publication with other Department guidance and legal standards.”

The key structural change in the new guidance was a reorganization of the “sample topics and questions” from the 2017 guidance under the rubric of three overarching questions for prosecutors to ask in evaluating compliance programs:

  1. Is the corporation’s compliance program well designed?
  2. Is the program being applied earnestly and in good faith? (i.e., is it implemented effectively?)
  3. Does the corporation’s compliance program work in practice?

The topics covered under the prior guidance are then expanded upon in narrative form, often with more nuanced questions to consider, along with illustrative examples of steps some companies have taken to enhance their compliance programs.

In addition to consolidating the Fraud Section’s prior guidance under the broader Criminal Division umbrella and simplifying its conceptual approach, the key thematic takeaway of this update is that DOJ expects compliance to be an iterative, ongoing process that is focused not just on what policies say or whether there is comprehensive training, but also on whether companies are learning from experience and adjusting accordingly. Much as a company would adapt its business plan to reflect changes in technology, trade relations, and/or geopolitical developments, DOJ expects compliance regimes, writ large, to adapt to evolving compliance challenges and standards.

In practical terms this means that compliance programs need to be updated to reflect actual experiences, both internal (e.g., incidents at the company) and external (e.g., infractions in a particular industry or geographic region). Whether those updates reflect changes in particular control functions, results of internal audits or investigations, enforcement actions in a particular industry or region, or simply better messaging, will vary from company to company. But the message from DOJ is that they are going to assess not only a company’s compliance policies and training records, but also records of how and why the compliance program evolved over time. Although not an entirely new approach, the focus on real world experiences and responses to those experiences is noteworthy.

Unsurprisingly, DOJ’s updated guidance on assessing corporate compliance programs makes clear that it is still intended to assist prosecutors on a wide range of determinations including charging decisions, resolution format, monetary penalties, and whether to impose compliance obligations as part of a resolution (e.g., a monitorship or reporting obligations). And, importantly, the guidance reaffirms that DOJ “does not use any rigid formula to assess the effectiveness of corporate compliance programs” and that it “recognize[s] that each company’s risk profile and solutions to reduce its risks warrant particularized evaluation.” It is not a one size fits all approach, to be sure, but companies under the spotlight should be prepared to defend their unique approach to compliance in a way that reflects their particular experience.

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Photo of Thomas Hanusik Thomas Hanusik

Tom Hanusik is a partner in Washington D.C. and a member of Crowell & Moring’s White Collar & Regulatory Enforcement Group, which Law360 named a “White Collar Group of the Year” in 2012 and one of ten “FCPA Powerhouses” in 2013. Tom is…

Tom Hanusik is a partner in Washington D.C. and a member of Crowell & Moring’s White Collar & Regulatory Enforcement Group, which Law360 named a “White Collar Group of the Year” in 2012 and one of ten “FCPA Powerhouses” in 2013. Tom is also chair of Crowell & Moring’s Investigations practice and a member of the firm’s Management Board.

Tom’s practice focuses on white collar defense, SEC Enforcement, FINRA Enforcement and internal investigations. He defends publicly traded and privately held companies, senior executives, board members and politicians during internal and government investigations, criminal and civil trials, regulatory enforcement actions, and appeals. Tom has over twenty years of trial and appellate experience. He also leads teams conducting internal investigations on behalf of companies, boards of directors and board committees, as well as advising corporate clients on remedial measures, compliance programs and training. Tom’s recent engagements include representing institutions and executives in matters involving alleged violations of federal securities laws including financial fraud, insider trading, FCPA and Section 5 violations, AML requirements, federal and state tax offenses, public corruption and violations of U.S. export controls and sanctions regulations.

Photo of Derek Hahn Derek Hahn

Derek Hahn is a partner in Crowell & Moring’s White Collar & Regulatory Enforcement Group and a member of the firm’s Investigation Practice. Derek’s practice focuses on white collar defense, internal investigations, complex litigation, and compliance counseling.  He represents clients in an array…

Derek Hahn is a partner in Crowell & Moring’s White Collar & Regulatory Enforcement Group and a member of the firm’s Investigation Practice. Derek’s practice focuses on white collar defense, internal investigations, complex litigation, and compliance counseling.  He represents clients in an array of government investigations and enforcement actions alleging financial fraud, public corruption, conflicts of interest, counterfeiting, procurement integrity, and health care fraud. Derek has also defended clients in several multi-million dollar environmental enforcement matters at both the federal and state level.

Derek has extensive experience managing matters involving the Foreign Corrupt Practices Act (FCPA) having counseled clients in multiple industries on FCPA matters across six continents. His FCPA experience includes government and internal investigations, third-party due diligence reviews, compliance program and training development, and anti-corruption risk assessments. He has defended multiple FCPA investigations brought by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).

Photo of Lorraine M. Campos Lorraine M. Campos

Lorraine M. Campos is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group and focuses her practice on assisting clients with a variety of issues related to government contracts, government ethics, campaign finance, and lobbying laws. Lorraine…

Lorraine M. Campos is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group and focuses her practice on assisting clients with a variety of issues related to government contracts, government ethics, campaign finance, and lobbying laws. Lorraine regularly counsels clients on all aspects of the General Services Administration (GSA) and the U.S. Department of Veterans Affairs (VA) Federal Supply Schedule (FSS) programs. She also routinely advises clients on the terms and conditions of these agreements, including the Price Reduction Clause, small business subcontracting requirements, and country of origin restrictions mandated under U.S. trade agreements, such as the Trade Agreements Act and the Buy American Act. Additionally, Lorraine advises life sciences companies, in particular, pharmaceutical and medical device companies, on federal procurement and federal pricing statutes, including the Veterans Health Care Act of 1992.

Lorraine has been ranked by Chambers USA since 2013, and she was recognized by Profiles in Diversity Journal as one of their “Women Worth Watching” for 2015. Additionally, Lorraine is active in the American Bar Association’s Section of Public Contract Law and serves as co-chair of the Health Care Contracting Committee.

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Paul Freeman is a partner in Crowell & Moring’s New York office and a member of the firm’s Environment & Natural Resources and Government Contracts groups. He brings two decades of diverse experience advising clients in the energy, maritime, and aerospace and defense…

Paul Freeman is a partner in Crowell & Moring’s New York office and a member of the firm’s Environment & Natural Resources and Government Contracts groups. He brings two decades of diverse experience advising clients in the energy, maritime, and aerospace and defense industries on a range of issues, with a primary emphasis on matters involving enforcement defense, litigation, and risk management.

Paul routinely advises clients in response to investigations by, or inquiries from, a range of regulators, primarily the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ), and also including the U.S. Securities and Exchange Commission, the Internal Revenue Service, the U.S. Department of Defense Inspector General, the Federal Bureau of Investigation, the U.S. Commodity Futures Trading Commission, and state attorneys general.

Photo of Payal Nanavati Payal Nanavati

Payal Nanavati is an associate in the firm’s Washington, D.C. office, where she practices in the Health Care and Government Contracts groups. Payal’s government contracts practice focuses on defending companies under the False Claims Act (FCA), litigation before the Armed Services Board of…

Payal Nanavati is an associate in the firm’s Washington, D.C. office, where she practices in the Health Care and Government Contracts groups. Payal’s government contracts practice focuses on defending companies under the False Claims Act (FCA), litigation before the Armed Services Board of Contract Appeals (ASBCA), and bid protests before the Government Accountability Office (GAO). Her health care practice includes working with providers and plans seeking to comply with laws and regulations applicable to digital health initiatives, fraud and abuse, and mental health parity.

Photo of Nkechi Kanu Nkechi Kanu

Nkechi A. Kanu is a counsel in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Nkechi’s practice focuses on False Claims Act investigations and litigation. Nkechi has significant experience assisting companies with…

Nkechi A. Kanu is a counsel in the Washington, D.C. office of Crowell & Moring, where she is a member of the firm’s Government Contracts Group.

Nkechi’s practice focuses on False Claims Act investigations and litigation. Nkechi has significant experience assisting companies with complex internal investigations and represents clients in government investigations involving allegations of fraud. She also focuses on assisting clients with investigations relating to cybersecurity and information security compliance. Her complementary litigation practice involves defending companies in government-facing litigation arising under the FCA, resulting in the dismissal of qui tam complaints and successful settlements of FCA claims with DOJ.