In recent months, public statements by the Biden administration and senior officials from US enforcement agencies attest to a renewed focus on corporate wrongdoing in the areas of corruption, money-laundering, market manipulation, fraud and insider trading, as well as an intention to vigorously pursue sanctions and export control violations, cryptocurrency-related crime, and ransomware attacks, with a notable ongoing focus on China.
We look here at how the US enforcement agencies intend to approach these areas and how companies can respond.
A clear intention to supercharge corporate crime enforcement
Recent public statements by senior prosecutors and official government memoranda (such as the June 2021 National Security Study Memorandum and the December 2021 US Strategy on Countering Corruption) show a renewed (and expected) focus on corporate enforcement efforts.
The Biden administration intends to ensure the approach to investigating corporate wrongdoing:
- leverages data and modern methods of intelligence and evidence gathering, including the use of proactive approaches like data mining;
- is well-resourced—the US Strategy on Countering Corruption recognizes the need to “devote additional human resources to synchronize anti-corruption work” across enforcement agencies, which is consistent with statements by senior DOJ officials that the Department is “building up to surge resources”; and
- makes the most of international relationships and coordination.
The focus on these methods should allow US prosecutors not only to pursue cases once they come in the door but also to better identify cases for investigation.
In November 2021, the US DOJ also introduced significant policy changes that mark a shift in tone, strengthening the department’s response to corporate crime. In particular, the policy changes signal greater scrutiny of past corporate misconduct, broader expectations for corporate disclosures regarding individuals, and increased reliance on corporate monitorships.
The statement of intent could not be clearer. The Biden administration looks poised to embark on an aggressive domestic and international enforcement agenda in the coming year, which will have important implications for international corporate crime enforcement given the US government’s role as a global leader in this space.
How companies operating in the US and beyond can prepare
Ensure reasonable alignment with government guidance: Companies should take reasonable steps to align their practices with DOJ expectations, including as set forth in the June 2020 Guidance on the Evaluation of Corporate Compliance Programs. Companies should ensure their anti-bribery and corruption programs align with the July 2020 FCPA Resource Guide, and, in the deal context, that they are conducting reasonable, risk-based due diligence and integration efforts.
All organizations should consider money-laundering within the universe of risk: Alongside corruption, the US Strategy on Countering Corruption identifies several AML enforcement priorities. Specifically, it targets high-risk business sectors, including digital asset transfers, real estate transactions, and government procurement decisions. It also targets high-risk actors such as offshore financial centers, investment advisors and private equity funds, and other financial “gatekeepers” that facilitate transactions. The newly enacted Corporate Transparency Act, currently undergoing implementation through rule making, requires (mostly smaller) companies to provide greater transparency to combat money laundering. The June 2021 National Security Study Memorandum also called for robust implementation of the Anti-Money Laundering Act of 2020. Companies in all sectors should consider their money-laundering risk and respond accordingly.
Take reasonable steps to confirm compliance programs still operate effectively: Amid changing working conditions brought on by the Pandemic, compliance teams may need to update risk profiles, pressure-test programs, and adapt employee guidance for new operating paradigms. For example, when employees are working remotely, are new tools required to communicate the appropriate “tone from the top” and reinforce the company’s commitment to achieving results the right way?
Be mindful of enforcement risk across jurisdictions: The enhanced efforts of the US agencies will resonate with foreign authorities leading to increased enforcement efforts in many additional jurisdictions. As a result, multinational companies should expect to see a cascade of increasing enforcement actions in key jurisdictions, with a possible emphasis on anti-corruption efforts—and they should plan accordingly.
This is the second in our 2022 Global Enforcement Outlook blog series, which will look at key enforcement and investigations trends over the next month. All other blogs in the series will be made available here.
For our previous blogs on the developments outlined in this post, see the investigations blogs on our US blog “A Fresh Take”.
