While some of the U.S. is caught up in post-season baseball, the legal community is paying close attention to the Department of Justice (DOJ), which keeps knocking out policy home runs.  

Since early 2017, the DOJ has announced several positive policy changes aimed at defending the rule of law, promoting effective corporate compliance programs, and addressing the over-enforcement issues faced by many businesses.

And in a recent speech, the head of the DOJ’s Criminal Division, Assistant Attorney General (AAG) Brian Benczkowski stressed the importance of compliance programs, saying “compliance is of ever greater importance in ensuring that companies operate efficiently and within the bounds of the law.”

Now, AAG Benczkowski has issued new guidance on the use of government-imposed monitors.

Monitors have traditionally been used to assess companies’ compliance with the terms of corporate criminal settlements. Individuals that serve in this role are usually third parties approved by the DOJ. They review companies’ compliance policies and make recommendations that management must implement. Monitors are usually kept on company payroll for years, adding costs to already sky-high penalties.

Over time, monitors became a common condition of settlement with the DOJ, even in cases where the benefit of a monitor wasn’t apparent. A recent article from The Wall Street Journal stated that, during the past five years, roughly one-third of corporate criminal investigations settled with the DOJ’s Fraud Section included a monitor.

With this new guidance, the DOJ has taken the position that the imposition of a monitor should only occur when there is a demonstrated need. The memo states: “[w]here a corporation’s compliance program and controls are demonstrated to be effective and appropriately resourced at the time of resolution, a monitor will likely not be necessary.”

Going forward, the DOJ will consider the following criteria when deciding whether a monitor should be used:

• The type of misconduct—such as whether it involved the manipulation of books and records or the exploitation of inadequate internal controls and compliance programs;
• The pervasiveness of the conduct and whether it involved senior management;
• Any investment and improvements a company has made to its corporate compliance program and internal control systems;
• Whether remedial measures have been tested for the ability to prevent or deter similar misconduct in the future;
• Whether the misconduct took place in an inadequate compliance environment that no longer exists;
• Whether misconduct took place under different corporate leadership;
• The unique risks and compliance challenges of the particular region and industry in which a company operates; and
• The financial costs to a company, as well as unnecessary burdens to the business’ operations.

The U.S. Chamber Institute for Legal Reform (ILR) applauds Mr. Benczkowski and the Department for taking this important step that will promote compliance and move the over-enforcement needle in the right direction.

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