The US Department of Justice (DOJ) Criminal Division issued an April 2019 update of its guidance document “Evaluation of Corporate Compliance Programs.”
Quality of Compliance Program May Prevent or Minimize Criminal Prosecution
The guidance is specifically for federal prosecutors who may be evaluating a corporation’s compliance program in determining if to investigate a corporation, to bring charges, or to negotiate a plea or other agreement.
Corporations often cite their compliance programs in advocating no or minimal criminal charges when potential criminal liability is at issue. Federal prosecutors will use this guidance in evaluating the quality of the compliance program.
Also, corporations can use the guidance in designing or improving their corporate compliance programs.
Design, Application, and Results
In evaluating corporate compliance programs under this guidance, DOJ will focus on the program’s design, application, and results.
Design: Is the Compliance Program Well Designed?
A well-designed compliance program must first identify and prioritize risks. Resources should correspond to the level of risk, rather than concentrating on low risk activities.
It must be comprehensive and accessible. All employees must be trained, and the training should be appropriate for different employees. This could involve language issues and special training for those in high risk or control positions. Guidance should be available, and management should communicate their responses to discovered misconduct.
The program should have an effective reporting and response mechanism, including opportunity for confidential reporting. A program without anonymous reporting available must explain its absence.
The program must apply to appropriate third parties and be used in due diligence as to acquisition targets.
Application: Is the Program Being Applied Earnestly and in Good Faith? In other Words, Is the Program Being Implemented Effectively?
Keys to effective implementation include commitment of senior and middle management, adequate autonomy and resources, and appropriate incentives and disciplinary measures.
Results: Does the Program Work in Practice?
To determine if the program works in practice, the program must have continuous improvement with periodic testing and review, rigorous investigation of allegations of misconduct, and analysis and remediation of any underlying misconduct, which will generally be identified by a thorough root cause analysis.
For a copy of DOJ press release, which includes a link to the guidance document https://www.justice.gov/opa/pr/criminal-division-announces-publication-guidance-evaluating-corporate-compliance-programs