For the second time in a little over two years, the Criminal Division of the U.S. Department of Justice has revised its guidance regarding prosecutors’ evaluation of corporate compliance programs (“the 2019 Guidance”) for companies implicated in misconduct. On April 30, 2019, the Criminal Division announced the 2019 Guidance, which “seeks to better harmonize the guidance with other Department guidance and standards while providing additional context to the multifactor analysis of a company’s compliance program. This 2019 Guidance follows a February 2017 update, which, as we previously reported, was issued without a press release or accompanying public statement.
The 2019 Guidance, available here, builds upon the Criminal Division’s promise, first publicized in February 2016 and often cited by Assistant Attorney General Brian A. Benczkowski, who assumed office in July 2018, for transparency and, accordingly, a more nuanced discussion about the issues of interest to federal investigators and prosecutors when evaluating corporate compliance programs. To that end, the 2019 Guidance dismantled the 2017 Guidance’s organization in 11 broadly-framed topics (such as Analysis and Remediation of Underlying Misconduct; Policies and Procedures; Risk Assessment; etc.), instead focusing the analysis on three “fundamental questions”:
Question 1: Is the corporation’s compliance program well designed?
Question 2: Is the program being applied earnestly and in good faith? In other words, is the program being implemented effectively?
Question 3: Does the corporation’s compliance program work in practice?
Beneath the umbrella of these three questions, the 2019 Guidance reaffirms and supplements the previous discussion of factors that should be investigated and considered. The 2019 Guidance pulls from other sources, such as the Justice Manual and the Sentencing Guidelines, but centralizes these considerations in one location, assisting both prosecutors conducting investigations and companies working to ensure their compliance programs are well designed and implemented effectively.
Though the 2019 Guidance reiterates that prosecutors will make individualized determinations in each case and that the sample questions and topics it has provided are “neither a checklist nor a formula,” the increasing clarity the Guidance seeks to impart on prosecutors’ evaluation process is an invaluable tool. As the backbone of prosecutors’ “informed decisions” about charging or reaching a resolution, companies should also utilize the 2019 Guidance when assessing or implementing their own compliance programs.