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Corporate Compliance Programs and the DOJ's Emphasis on Data Analytics: What Companies Need to Consider
In recent months, the U.S. Department of Justice (DOJ) has raised expectations for companies to use data analytics to monitor the effectiveness of their compliance programs and to identify potential misconduct. By its terms, data analytics is the process of analyzing raw data in order to discover useful information to inform conclusions and decision-making. The DOJ has increasingly used data analytics to identify potential wrongdoing and has recently sent the message that it expects companies to follow suit and incorporate data analytics in their compliance programs. In June 2020, the Criminal Division of the DOJ issued revised guidance (June 2020 Guidance) about how it will evaluate corporate compliance programs, and it included specific references to the use of data analytics. U.S. Dep't of Justice, Criminal Div., Evaluation of Corporate Compliance Programs (June 2020).
Prior to the June 2020 Guidance, the DOJ had signaled its increased reliance on data analytics to identify potential wrongdoing and bring cases, especially within certain industries. During former Deputy Assistant Attorney General Matthew S. Miner's remarks at the 6th Annual Government Enforcement Institute in September 2019, he noted that the "use of data analytics has allowed for greater efficiency in identifying investigation targets, which expedites case development, saves resources, makes the overall program of enforcement more targeted and effective." Deputy Assistant Attorney General Matthew S. Miner Delivers Remarks at the 6th Annual Government Enforcement Institute (Sept. 12, 2019) (https://bit.ly/3mFsuP0). In confirming the DOJ's "focus on data analytics in identifying cases," Miner wanted to let "compliance-oriented companies," particularly companies in the securities and commodities trading space, "know that this is an area of focus." Id. And if misconduct does occur, Miner explained, prosecutors will inquire about what the company did to analyze or track its own data resources, both at the time of the misconduct as well as at the time of a potential resolution. Id. The June 2020 Guidance incorporates this concept but does not limit it to the industries noted in Miner's remarks. In evaluating corporate compliance programs, prosecutors will now inquire about what a company did to analyze or track its own data resources.
Revised DOJ Guidance on Corporate Compliance Programs
The June 2020 Guidance builds on the Criminal Division's "Ten Hallmarks of Effective Compliance Programs," issued in 2012, the elaboration on that guidance issued in February 2017, and the subsequent update issued in April 2019. The evolution of the guidance helps companies identify what the DOJ considers best practices when designing and implementing a robust compliance program. The June 2020 Guidance notes that it "is meant to assist prosecutors in making informed decisions as to whether, and to what extent, the corporation's compliance program was effective at the time of the offense, and is effective at the time of a charging decision or resolution." June 2020 Guidance at 1. The guidance also assists companies in designing an effective program with all of the hallmarks that are significant to the DOJ so that any potential misconduct is detected early or prevented altogether.
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