Innovation Update

DOJ asks, ‘Can you show your compliance and anti-fraud program actually works?’

The U.S. Department of Justice (DOJ) recently updated its “Evaluation of Corporate Compliance Programs,” the primary guidance for DOJ prosecutors when they assess penalties. These updates provide insights into the factors DOJ is likely to emphasize when it evaluates the effectiveness of your organization’s compliance program — should you come under scrutiny.

The Evaluation of Corporate Compliance Programs, originally published in April 2019 and updated in June, is the U.S. Department of Justice’s (DOJ) leading guidance on how its prosecutors evaluate the design, deployment and effectiveness of companies’ compliance programs.

Many elements in the DOJ guidance echo the COSO/ACFE Fraud Risk Management Guide. However, the DOJ document is also a handbook for prosecutors when they’re deciding on whether to charge companies with violations of laws. The guidance also helps them develop sentencing recommendations or assign corporate compliance obligations, such as naming independent monitors to oversee improvements of compliance programs. This guidance document gives you a unique look into how DOJ prosecutors could view and evaluate your organization’s compliance program.

The 2020 DOJ guidance emphasizes that companies can’t use a one-size-fits-all approach when they construct their compliance programs. The guidance also asks prosecutors to make a “reasonable, individualized determination in each case that considers various factors including, but not limited to, the company’s size, industry, geographic footprint, regulatory landscape and other factors, both internal and external to the company’s operations, that might impact its compliance program.”

The 2020 updates aren’t dramatically different from the original April 2019 document, but they signal that prosecutors will be looking more closely at whether compliance programs: 1) are adequately resourced 2) have formalized processes in place to continuously improve their effectiveness 3) have effectively incorporated the use of data analytics.

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