US corporate crime crackdown announced
Published on 17th Nov 2021
Inadequate compliance systems and terms of deferred prosecution agreements in spotlight
Businesses with a US presence should review their corporate crime compliance systems in the light of a tougher line announced by the US Department of Justice (DoJ).
The Financial Times (10 November 2021) carried a warning from John Carlin, a senior official at the DoJ advising that “cases in the weeks to come” will involve “some of the largest corporations” operating in or out of the United States.
One target of the of this new approach will be companies that fail to comply fully with the terms of deferred prosecution agreements (DPAs), a form of criminal settlement through which a corporate is sanctioned, but can avoid prosecution and conviction. DPAs are now also used in the UK by the Serious Fraud Office.
Also on the DoJ's radar are inadequate compliance systems, with Mr Carlin warning that companies without sufficient policies and procedures in place may face “significant” enforcement action, with the DoJ being clear that “now is the time to get the house in order” and “focus on compliance”.
Mr Carlin's statement reflects earlier indications that an increase in white-collar enforcement is imminent, as the Biden administration moves away from the light-touch approach of the Trump era. These have included significant changes to the DoJ enforcement policy and a warning from the Office of Foreign Assets Control (OFAC) that the payment of ransomware demands could violate US sanctions law and so result in prosecution.
In a clear statement of intent, Mr Carlin warned:
“There are going to be serious consequences. You should expect in the days, months, years to come an unprecedented focus by this attorney-general on corporate accountability,”
Osborne Clarke comment
The DoJ is undoubtedly seeking to reassert a pre-eminent role in global corporate criminal enforcement that was routinely in evidence before President Trump took office in 2017. The threat of the US acting as a “global police officer”, and so potentially taking action against UK companies saw a tougher line being adopted in the UK, and it may be that this renewed vigour from the US will also find its way into the UK, sooner rather than later.
In any event, Uncle Sam is baring his teeth again, and all organisations with a US presence should review relevant compliance programmes to ensure that they will adequately protect the business if faced with a DoJ investigation.