Business Crimes Hotline

New Department of Justice Guidance for Compliance Monitorships

On Oct. 11, 2018, Assistant Attorney General for the Criminal Division, Brian Benczkowski, issued the “Selection of Monitors in Criminal Division Cases” memorandum to “establish standards, policy, and procedures, for the selection of monitors” in U.S. Department of Justice (DOJ) Criminal Division cases involving a deferred prosecution agreement (DPA), non-prosecution agreement (NPA), or plea bargain between the DOJ and business organizations.

Building on the 2008 memorandum issued by then Acting Deputy Attorney General, Craig Morford (“Selection and Use of monitors in Deferred Prosecution Agreements and Non-Prosecution Agreements with Corporations”), Benczkowski opens with a discussion of applicable DOJ considerations regarding appointment of a compliance monitor. Specifically, the factors considered by Criminal Division attorneys are as follows:

• Whether the underlying misconduct involved the manipulation of corporate books and records or the exploitation of an inadequate compliance program or internal controls systems;
• Whether the misconduct at issue was pervasive across the business organization or approved or facilitated by senior management;
• Whether the corporation has made significant investments in, and improvements to, its corporate compliance program and internal controls systems; and
• Whether remedial improvements to the corporate compliance program and internal controls have been tested to demonstrate that they would prevent or detect similar misconduct in the future.

The memorandum further notes that the DOJ should take monetary costs to the business into account — particularly compared to any potential benefits gained by the monitorship — in addition to “the unique risks and compliance challenges the company faces” in light of its industry and operating jurisdictions.

In the event a corporate compliance monitor is imposed, the memorandum goes onto discuss in detail the compliance monitor selection process, which is broken into six primary components:

• Nomination of monitor candidates;
• Initial review of monitor candidates;
• Preparation of a monitor recommendation memorandum;
• Standing Committee review of a monitor candidate;
• Review by the Assistant Attorney General; and
• Approval by the Office of the Deputy Attorney General.

Further, the memorandum also briefly touches on internal DOJ approval and consultation requirements; terms required in DPAs, NPAs, and plea agreements related to compliance monitors; and the Standing Committing protocol for DOJ's monitor selection.

The following day, on Oct. 12, 2018, Benczkowski spoke at the New York University Law School Corporate Compliance and Enforcement Conference and touched on, among other DOJ enforcement trends and priorities, appointing compliance monitors and the recently announced guidance. Calling it a “pragmatic approach,” Benczkowski indicated that “the imposition of a corporate monitor is never meant to be punitive,” and that the goal of the new policy is to “ensure that [DOJ will] continue to carefully evaluate each case.” Importantly, Benczkowski also emphasized that “consistent with [DOJ's] longstanding practice of imposing corporate monitors as the exception, not the rule.”

While the “Selection of Monitors in Criminal Division Cases” is largely consistent with earlier DOJ policy and practice, it provides further transparency with respect to the specific factors considered in evaluating whether to impose a corporate compliance monitor.

— Colleen Snow, Mayer Brown