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Argentieri Speech and 2024 ECCP: Data Access and Data Analytics

Deputy Assistant Attorney General Nicole M. Argentieri’s speech highlighted a critical shift in the DOJ’s approach to evaluating corporate compliance programs. As outlined in the updated 2024 Evaluation of Corporate Compliance Programs (2024 ECCP), the emphasis on data access signals a new era where compliance professionals are expected to wield data with the same rigor and sophistication as their business counterparts.

In her remarks, Argentieri said, “Third, under the updated ECCP, our prosecutors will assess whether a compliance program has appropriate access to data, including to assess its effectiveness. We have added questions about whether compliance personnel have adequate access to relevant data sources and the assets, resources, and technology available to compliance and risk management personnel. As part of this assessment, we will also consider whether companies are putting the same resources and technology into gathering and leveraging data for compliance purposes they use in their business.”

Her remarks were paired with new language in the 2024 ECCP, which stated:

Data Resources and Access – Do compliance and control personnel have sufficient direct or indirect access to relevant data sources for timely and effective monitoring and/or testing of policies, controls, and transactions? Do any impediments exist that limit or delay access to relevant data sources, and if so, what is the company doing to address the impediments? Do compliance personnel know of and have the means to access all relevant data sources reasonably timely? Is the company appropriately leveraging data analytics tools to create efficiencies in compliance operations and measure the effectiveness of components of compliance programs? How is the company managing the quality of its data sources? How does the company measure the accuracy, precision, or recall of any data analytics models it uses?

Proportionate Resource Allocation – How do the assets, resources, and technology available to compliance and risk management compare to those available elsewhere in the company? Is there an imbalance between the technology and resources used by the company to identify and capture market opportunities and the technology and resources used to detect and mitigate risks?

The speech and the 2024 ECCP put new and additional requirements around a corporate compliance program in the areas of data and data analytics. But how exactly should compliance teams navigate these heightened expectations? Here’s what you must do to ensure your compliance program meets these new standards.

Evaluate Your Data Access to Ensure Unimpeded Access to Relevant Data

The first step in aligning with the DOJ’s expectations is to conduct a comprehensive audit of your current data access. Compliance professionals must ask:

  • Conduct a Data Access Audit. Identify all the critical data sources for monitoring and testing your compliance policies, controls, and transactions. This includes financial transactions, communications, third-party interactions, and other data relevant to your risk profile.
  • Identify and Eliminate Barriers. Once you have a map of your data landscape, scrutinize it for any impediments that may limit or delay access to critical data. These barriers could be technical, such as legacy systems that do not integrate well, or organizational, like departmental silos that restrict data flow. Develop a plan to remove these impediments, whether through technology upgrades, process improvements, or changes in data governance.
  • Educate and Empower Compliance Teams. It is not enough for data to be accessible; your compliance personnel must also have the knowledge and tools to access it effectively. Invest in training programs that enhance data literacy among your team members, ensuring they can navigate and leverage data to its full potential.

The DOJ will scrutinize whether your compliance team has the same data visibility as other business units. If you find gaps, now is the time to bridge them.

Assess Resource Allocation for Data Analytics

Argentieri’s remarks also underscore the importance of resourcing. It is more than having data; your corporate compliance function must have the tools and talent to analyze it effectively. The 2024 ECCP emphasizes the importance of using data analytics tools to create efficiencies in compliance operations and measure the effectiveness of compliance programs.

  • Technology Investment. Are you using advanced analytics tools? Leverage AI and machine learning to proactively identify patterns, anomalies, and potential compliance risks.
  • Invest specifically in Advanced Analytics Tools. Ensure that your compliance program is equipped with state-of-the-art data analytics tools. These tools should be capable of processing large volumes of data, identifying patterns, and flagging potential risks in real-time. Artificial intelligence (AI) and machine learning (ML) can be particularly useful in predictive analytics, helping you stay ahead of emerging risks.
  • Human Resources. Do you have data-savvy compliance professionals on your team? Consider upskilling current staff or hiring data analysts who understand the technical and regulatory landscapes.
  • Benchmark Resources Across the Organization. Start by comparing the assets, resources, and technology available to your compliance and risk management teams with those available in other departments, particularly those focused on capturing market opportunities. Look for any imbalances that could undermine the effectiveness of your compliance efforts.
  • Make a case for compliance. If compliance is underresourced, build a compelling business case for increased investment. Highlight the risks associated with inadequate compliance resources, including the potential for regulatory breaches, reputational damage, and financial losses. Use data to demonstrate how enhanced resources could improve compliance outcomes and protect the organization.

Implement Real-Time Monitoring

The DOJ’s focus on data access and analytics also means that real-time monitoring should be a cornerstone of your compliance strategy. Static, periodic reviews are no longer sufficient.

  • Continuous Data Feeds. Implement systems that provide compliance officers with ongoing, real-time data. This allows for immediate detection of potential issues.
  • Automated Alerts. Set up automated alerts for key risk indicators, such as unusual transaction patterns or policy violations. This ensures that your team can respond to potential breaches before they escalate.
  • Integrate Compliance into Business Strategy. To ensure ongoing support, integrate compliance more closely with business strategy. Show how robust compliance efforts contribute to long-term success, aligning compliance goals with the company’s objectives.

Leverage Data to Assess Compliance Program Effectiveness

The ultimate goal of data access and analytics is to measure and improve the effectiveness of your compliance program. The DOJ is looking for companies that can demonstrate how they use data to inform their compliance efforts.

  • KPIs and Metrics. Develop key performance indicators (KPIs) that track compliance program success. Metrics might include the number of detected compliance incidents, response times, or the effectiveness of training programs.
  • Data-Driven Adjustments. Use data insights to make real-time adjustments to your compliance strategy. If the data shows a particular area of concern, pivot quickly and address it with targeted interventions.
  • Measure the Effectiveness of Analytics Models. Develop metrics to evaluate the performance of your data analytics models. These could include detection rates, false positive/negative ratios, and the speed at which issues are identified and resolved. Review and refine these models to ensure they deliver accurate and actionable insights.

Ensure Transparency and Documentation

Finally, remember that the DOJ will be looking for transparency. Be prepared to demonstrate how you use data, make decisions, and allocate resources.

  • Document, Document, Document. Keep thorough records of your data access, analysis processes, and any adjustments based on data insights.
  • Audit Trails. Maintain clear audit trails that show how data influenced compliance decisions. This will be critical in demonstrating to the DOJ that your program is reactive and proactively leveraging data to prevent compliance failures.
  • Monitor Data Quality. High-quality data is the backbone of effective compliance. Regularly assess the quality of your data sources, checking for accuracy, precision, and recall. Implement data governance frameworks that ensure data integrity and reliability, ensuring your analytics models are based on the best available data.

Finally, under Part III of the 2024 ECCP, in the section entitled, Does the Corporation’s Compliance Program Work in Practice?, the DOJ said prosecutors would pose the following question, “Prosecutors should also assess how the company has leveraged its  data to gain insights into the effectiveness of its compliance program and otherwise sought to  promote an organizational culture that encourages ethical conduct and a commitment to  compliance with the law.”

Coupling that language from the 2024 ECCP with Nicole Argentieri’s speech, you see a clarion call for compliance professionals to elevate their programs through the availability and utilization of data and data analytics to meet the DOJ’s evolving expectations. The message is clear: data is not just a business asset but a compliance imperative. By ensuring unimpeded and robust data access, investing in analytics, implementing real-time monitoring, leveraging data to assess program effectiveness, and achieving resource parity for compliance, your compliance program will meet the DOJ’s standards and drive greater organizational integrity and resilience. In this new era of data-driven compliance, the key to success lies in strategic investment and proactive management.

The stakes have never been higher, but with the right approach, the rewards—reducing risk and increasing trust—are worth the effort.

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Compliance Into the Weeds

Compliance into the Weeds: Argentieri Speech and Updated ECCP – The First Analysis

The award-winning, Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. Looking for some hard-hitting insights on compliance? Look no further than Compliance into the Weeds!

In this episode, Tom Fox and Matt Kelly take a deep dive into the speech by Principal Deputy Assistant Attorney General Nicole M. Argentieri at the Society of Corporate Compliance and Ethics 23rd Annual Compliance & Ethics Institute.

Argentieri, revealed substantial updates to the department’s Evaluation guidelines for effective compliance programs, focusing on whistleblower protections and the effectiveness of reporting mechanisms. Matt, reporting live from Dallas, discussed the implications of these updates, especially regarding the DOJ’s increased scrutiny on companies speak-up cultures and the protection of whistleblowers.

Tom and Matt explored the practical steps compliance officers need to take to meet these new DOJ expectations, including ensuring anonymous reporting mechanisms are well-publicized and effectively utilized, fostering a culture that encourages reporting without fear of retaliation, and aligning company policies with the latest external whistleblower protection laws. They also touched on the potential challenges of balancing AI risks with these new guidelines and the broader impact on compliance programs.

Key Highlights:

  • Key focus on enhancing whistleblower protections.
  • Compliance officers must ensure that reporting mechanisms are well-publicized.
  • Importance of aligning internal policies with external whistleblower protection laws to ensure comprehensive employee training.
  • Balancing the challenges of AI risks with the need to adhere to new DOJ guidelines.
  • The practical steps for compliance professionals to align their programs with DOJ’s evolving expectations.

Resources:

Matt in Radical Compliance

Tom in the FCPA Compliance and Ethics Blog

Tom

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Argentieri Speech and 2024 ECCP: Whistleblowers and Anti-Retaliation

Deputy Assistant Attorney General Nicole M. Argentieri’s speech highlighted a critical shift in the Department of Justice’s (DOJ) approach to evaluating corporate compliance programs. As outlined in the updated 2024 Evaluation of Corporate Compliance Programs (2024 ECCP), the emphasis on data access signals a new era where compliance professionals are expected to wield data with the same rigor and sophistication as their business counterparts.

In her remarks, Argentieri said, “Second, following the recent announcement of our whistleblower awards program, the ECCP now includes questions designed to evaluate whether companies encourage employees to speak up and report misconduct or employ practices that chill reporting. Our prosecutors will closely consider the company’s commitment to whistleblower protection and anti-retaliation by assessing policies and training, as well as the treatment of employees who report misconduct. We will evaluate whether companies ensure that individuals who suspect misconduct know how to report it and feel comfortable doing so by showing that there is no tolerance for retaliation.”

Her remarks were paired with new language in the 2024 ECCP, which stated:

Effectiveness of the Reporting Mechanism – Does the company have an anonymous reporting mechanism, and why not? How is the reporting mechanism publicized to the company’s employees and other third parties? Has it been used? Does the company test whether employees know the hotline and feel comfortable using it? Does the company encourage and incentivize reporting of potential misconduct or violation of company policy? Conversely, does the company use practices that tend to chill such reporting? How does the company assess employees’ willingness to report? How has the company assessed the seriousness of the allegations it received? Has the compliance function had full access to reporting and investigative information? 

Commitment to Whistleblower Protection and Anti-Retaliation. Does the company have an anti-retaliation policy? Does the company train employees on internal and external anti-retaliation policies and whistleblower protection laws? To the extent that the company disciplines employees involved in misconduct, are employees who reported internally treated differently than others involved in misconduct who did not? Does the company train employees on internal reporting systems, external whistleblower programs, and regulatory regimes?

The speech and the 2024 ECCP impose new and additional requirements on a corporate compliance program in internal reporting, whistleblower protection, and anti-retaliation. But how exactly should compliance teams navigate these heightened expectations? Here’s what you must do to ensure your compliance program meets these new standards.

The DOJ has made it abundantly clear that companies must have effective, accessible, and well-publicized reporting mechanisms coupled with ironclad whistleblower protections. For compliance professionals, this mandate represents a critical component of a company’s overall compliance program that cannot be overlooked or underestimated. Here is what you need to do to implement these DOJ requirements effectively.

Establish and Maintain an Anonymous Reporting Mechanism

First and foremost, your company must have an anonymous reporting mechanism—commonly known as a hotline. If your company lacks this, it’s time to address this gap immediately.

  • Set Up a Hotline. Implement a reliable, user-friendly, anonymous reporting mechanism. This could be a dedicated phone line, an online portal, or both. The key is to ensure that employees and third parties can report misconduct without fear of exposure.
  • Publicize the Mechanism Effectively. Once in place, make sure everyone knows about it. Publicize the hotline through multiple channels—email announcements, posters in common areas, mentions in training sessions, and inclusion in employee handbooks. The goal is to ensure that no one in the organization can claim ignorance of its existence.
  • Test Awareness and Comfort Levels. Regularly survey employees to gauge their awareness of the hotline and their comfort in using it. This can be done through anonymous questionnaires or during training sessions. The DOJ expects companies to have a hotline that employees know and trust.

Encourage and Incentivize Reporting

A reporting mechanism is only as effective as the culture that surrounds it. Compliance professionals must work to foster an environment where reporting is encouraged and valued.

  • Positive Reinforcement. Encourage reporting by framing it as a positive, company-supportive action. Highlight success stories where reports led to meaningful change or helped the company avoid greater risks. Consider incentivizing reporting through recognition programs or other rewards that align with your company’s culture.
  • Avoid Chilling Practices. Be mindful of practices or policies that might discourage reporting. For example, employees will quickly learn to stay silent if your company has a history of disregarding reports or retaliating against reporters. Review your policies to ensure they don’t inadvertently dissuade reporting and correct any past practices that might have had this effect.
  • Leadership Commitment. The tone from the top is critical. Senior leaders must openly support and advocate for whistleblower protections. This includes publicly acknowledging the importance of reporting misconduct and demonstrating zero tolerance for retaliation. Leaders should actively participate in training sessions and speak about the value of transparency and accountability.
  • Anonymous Reporting Channels. While encouraging open dialogue is important, some employees may feel more comfortable reporting anonymously. Ensure that your organization has robust, confidential reporting channels in place. These might include hotlines, online portals, or third-party reporting services. Make sure these channels are well-publicized and easy to use.

Assess and Act on Internal Reports Thoroughly

The DOJ wants to know that companies take reports seriously. This means evaluating the seriousness of allegations promptly and thoroughly.

  • Rigorous Investigation Process. Ensure that all reports are promptly reviewed and assessed for seriousness. Develop a standardized process for triaging reports based on their nature and potential impact. This should involve clear guidelines for escalating significant issues to senior management or the board.
  • Full Access for Compliance. Your compliance function must have unrestricted access to all reporting and investigative information. This ensures that investigations are conducted independently and without interference and that the compliance team can assess trends, identify systemic issues, and recommend corrective actions.
  • 120 Days. Remember, the new Corporate Whistleblower Awards Pilot Program has a 120-day deadline from when a reporter speaks up in any manner internally. Companies must fully investigate and disclose to the DOJ within that timeline to be eligible for a Declination under the Corporate Enforcement Policy.

Reinforce Whistleblower Policies and Training

The foundation of any effective whistleblower program is a clear, robust policy communicated effectively across the organization.

  • Review and Update Whistleblower Policies. Start by revisiting your existing whistleblower policies. Ensure they clearly outline the process for reporting misconduct, the protections afforded to whistleblowers, and the consequences for retaliatory actions. Update your policies to reflect the latest regulatory guidance and industry best practices.
  • Comprehensive Training Programs. Policies are only effective if employees understand them. Develop and deliver training programs that educate employees on the importance of whistleblowing, the protections they are entitled to, and how to report concerns. This training should be mandatory, regularly updated, and tailored to different levels of the organization, ensuring everyone—from frontline employees to senior executives—understands their role in maintaining a speak-up culture.
  • Regular Communication. Keep whistleblowing at the forefront of your mind by regularly communicating the importance of speaking up. This can be through internal newsletters, town hall meetings, or dedicated campaigns reinforcing the company’s commitment to ethical conduct and employee protection.

Demonstrate Zero Tolerance for Retaliation

An effective compliance program must go beyond just having a hotline—it must actively protect those who use it. A key element of the DOJ’s evaluation will be how companies treat employees who report misconduct. It is critical to ensure there is no tolerance for retaliation.

  • Develop a Strong Anti-Retaliation Policy. Ensure your company has a comprehensive anti-retaliation policy that is clear, enforceable, and well-publicized. This policy should unequivocally state that retaliation against anyone who reports misconduct in good faith will not be tolerated.
  • Swift Action Against Retaliation. Establish clear, enforceable consequences for retaliatory behavior. If an employee experiences retaliation, act quickly to investigate the claim and, if necessary, take disciplinary action against those responsible. Publicize these actions (while maintaining confidentiality) to reinforce the message that retaliation will not be tolerated.
  • Training on Anti-Retaliation Laws. Train employees on your internal anti-retaliation policies and relevant external whistleblower protection laws. This training should be frequent and tailored to different levels of the organization, from entry-level employees to executives.
  • Monitor and Measure. Implement systems to track whistleblower reports and any subsequent actions. Regularly review this data to identify patterns or areas of concern, such as departments with higher rates of reported retaliation. Use this information to refine your policies and training, ensuring continuous improvement in your approach to whistleblower protection.

Build Trust Through Transparency

Trust is the cornerstone of any effective whistleblower program. Employees must know their concerns will be taken seriously and handled with integrity.

  • Transparency in Investigations. When a report is made, ensure the investigation process is transparent, thorough, and impartial. Keep the whistleblower informed (within the bounds of confidentiality) about the investigation’s progress and any resulting outcomes.
  • Fair Treatment of Whistleblowers. Scrutinize how whistleblowers are treated within your organization, especially if they are involved in the misconduct they reported. The DOJ will examine whether whistleblowers are treated fairly and without bias compared to others involved in the same incidents.
  • Celebrate Whistleblowers. Consider recognizing and celebrating employees who come forward with important information. While this can be a sensitive area, public acknowledgment (where appropriate) can reinforce the organization’s value of ethical behavior and speak up.

Evaluate and Improve Continuously

Finally, the DOJ will look for evidence that companies are committed to whistleblower protection and continuously improving their programs.

  • Regular Program Assessments. Conduct periodic assessments of your whistleblower program to ensure it remains effective and aligned with the latest regulatory expectations. This could involve employee surveys, focus groups, or third-party audits.
  • Act on Feedback. Use the insights gained from these assessments to make meaningful changes. Continuous improvement should be a core component of your whistleblower program, whether improving reporting channels, enhancing training, or refining policies.
  • Regular Training on Reporting Mechanisms. Incorporate training on internal reporting systems and external whistleblower programs into your regular compliance training. Employees should know how to report internally and to external regulators if necessary.
  • Assess Training Effectiveness. Regularly assess the effectiveness of this training through quizzes, feedback surveys, or audits. Ensure that employees understand the reporting systems and feel empowered to use them.

Nicole Argentieri emphasized the DOJ’s heightened focus on whistleblower protections within corporate compliance programs. This comes on the heels of the DOJ’s new whistleblower awards program and underscores the critical role of speak-up cultures in identifying and mitigating misconduct. For compliance professionals, this shift means more than just updating policies; it requires a fundamental reassessment of how your organization encourages, protects, and values whistleblowers. Here’s how you can align your compliance program with the DOJ’s expectations.

Her remarks make it clear that the DOJ is placing a renewed emphasis on whistleblower protections as a critical component of corporate compliance programs. For compliance professionals, this is both a challenge and an opportunity. By reinforcing your policies, fostering a culture of speaking up, demonstrating zero tolerance for retaliation, building trust, and committing to continuous improvement, you can meet the DOJ’s expectations and create a more ethical, transparent, and resilient organization.

The 2024 ECCP made it abundantly clear that companies must have robust, accessible reporting mechanisms and unwavering whistleblower protections. For compliance professionals, this means creating a culture that supports and actively encourages reporting. By setting up effective hotlines, fostering a positive reporting culture, ensuring thorough investigations, and protecting whistleblowers from retaliation, your compliance program will meet DOJ standards and contribute to a healthier, more ethical workplace. In today’s regulatory environment, the effectiveness of your reporting mechanism and commitment to whistleblower protection are no longer just best practices—they are imperatives.

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Daily Compliance News

Daily Compliance News: September 24, 2024 – The Revised ECCP Released Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network.

Each day, we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

In today’s edition of Daily Compliance News:

  • DOJ releases a 2024 update to the Evaluation of Corporate Compliance Programs. (FCPA Compliance & Ethics Blog)
  • Jackson Walker referred for disciplinary proceedings. (Reuters)
  • Singapore gears up for huge corruption trial. (Al Jazeera)
  • The UK government says flexible work is better for companies. (BBC)

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Argentieri Speech: 6 Key Takeaways for Compliance Programs

On Monday, Principal Deputy Assistant Attorney General Nicole M. Argentieri spoke at the Society of Corporate Compliance and Ethics 23rd Annual Compliance & Ethics Institute. ( A copy of her remarks can be found here.) She reiterated the long-stated policy that compliance professionals play a critical role in ensuring companies comply with the law and foster a culture of ethics and integrity. She noted that the Department of Justice (DOJ) has made it clear that companies are the first line of defense against corporate crime, and compliance officers are on the front lines of this defense. The 2024 update to the DOJ’s Evaluation of Corporate Compliance Programs (ECCP) and the introduction of new pilot programs in 2024 underscore the increasing importance of the roles of compliance professionals. This blog post will review the highlights from her speech, the key lessons from this 2024 update to the ECCP, and how they should shape our approach to compliance programs in our organizations.

Lesson 1: Embrace Continuous Improvement in Compliance Programs

The DOJ’s emphasis on continuous improvement in compliance programs is a call to action for all of us. The updated ECCP highlights the need for companies to regularly review and update their compliance programs to account for emerging risks, such as those posed by disruptive technologies like artificial intelligence (AI). As the pace of technological advancement is rapid, and with it come new risks. AI, for example, can be a double-edged sword—while it offers efficiency and insights, it can also be exploited for fraudulent purposes, such as generating false documentation or approvals. The DOJ now explicitly expects companies to assess and manage these risks, which means we must stay ahead of the curve in understanding and mitigating the potential pitfalls of new technologies.

Action Steps for the Compliance Professional:

  • Conduct regular risk assessments that include emerging technologies.
  • Implement controls that address the risks associated with AI and other disruptive technologies.
  • Ensure your compliance program evolves alongside technological advancements with continuous testing and monitoring.

Lesson 2: Foster a “Speak Up” Culture

The DOJ’s updates to the ECCP also emphasize encouraging a culture where employees feel comfortable reporting misconduct. The newly integrated questions into the ECCP regarding whistleblower protection reflect the DOJ’s serious stance on this issue. A “speak up” culture is foundational to a strong compliance program. Employees on the ground are often the first to spot potential issues, and creating an environment where they feel safe to report without fear of retaliation is crucial. The DOJ will scrutinize how well companies protect whistleblowers, so we must ensure our organizations have robust policies and training.

Action Steps for the Compliance Professional:

  • Review and strengthen whistleblower protection policies.
  • Regularly train employees on reporting misconduct and reassuring them about the protections in place.
  • Monitor the effectiveness of your whistleblower program and make necessary adjustments to enhance reporting mechanisms.

Lesson 3: Data Access is Key to Compliance Effectiveness

Another critical area highlighted in the DOJ’s ECCP updates is the importance of data access for compliance personnel. The DOJ will now evaluate whether compliance teams have adequate access to the necessary data to assess the effectiveness of their programs.

Over the past 18 months, the DOJ has made it clear that accessing and analyzing relevant data is crucial for identifying risks and monitoring compliance. If compliance teams are siloed or cut off from important data sources, it hampers their ability to do their jobs effectively, and the DOJ will take notice.

Action Steps for the Compliance Professional:

  • Ensure that compliance personnel have access to all relevant data sources.
  • Invest in the necessary technology and resources for effective data analysis and monitoring.
  • Work closely with IT and other departments to break down silos and facilitate seamless data access.

Lesson 4: Leverage Compensation to Drive Compliance

The DOJ’s Compensation Incentives and Clawbacks Pilot Program introduced a new dimension to compliance—aligning compensation with ethical behavior. This initiative requires companies to include compliance-related criteria in their compensation and bonus systems. While it is certainly not new to align compensation with compliance goals, it sends a powerful message to employees and management that ethical behavior is non-negotiable, and the new emphasis on consequences in the form of clawbacks and holdbacks must be considered. The DOJ views this leveraging of positive incentives and negative outcomes as a tangible link between individual performance and the company’s commitment to integrity.

Action Steps for the Compliance Professional:

  • Integrate compliance metrics into performance evaluations and compensation structures.
  • Regularly assess the effectiveness of these incentives and make adjustments as needed.
  • Make sure you have the contractual right to clawback incentive awards or holdback bonuses for executives who are culpable or have buried their collective heads in the sand while corruption surrounds them.

Lesson 5: The Importance of Cooperation and Remediation

The DOJ’s approach to corporate resolutions underscores the importance of timely and effective cooperation and remediation. Companies that act quickly to cooperate with the DOJ and take meaningful steps to remediate misconduct are rewarded with significant penalty reductions. How a company responds can significantly affect the outcome in the unfortunate event of misconduct. The DOJ’s recent resolutions show that companies that move swiftly and decisively to address issues are viewed more favorably.

Action Steps for the Compliance Professional:

  • Develop a clear protocol for responding to potential misconduct, including timely self-disclosure to the DOJ.
  • Ensure that your company is prepared to cooperate fully with any investigation.
  • Focus on meaningful remediation efforts that address the root causes of misconduct and prevent future occurrences.

Lesson 6: Whistleblower Programs as a Strategic Tool

Launching the DOJ’s Corporate Whistleblower Awards Pilot Program (CWA) is a significant development for compliance professionals. This program incentivizes internal reporting and substantially rewards companies that self-disclose misconduct. Given the number of reports the DOJ received in its first month (100), the CWA adds a new layer of urgency for companies to establish strong internal reporting mechanisms. Companies that encourage and protect whistleblowers can benefit from the CWA, while those that fail to do so may face harsher penalties.

Action Steps for the Compliance Professional:

  • Strengthen your internal reporting systems and ensure they are well-publicized within the company.
  • Make sure that your whistleblower policies are aligned with the DOJ’s expectations.
  • Actively monitor and protect whistleblowers, ensuring there is no retaliation against those who report misconduct.

Now is the Time to Act

The DOJ’s updated policies and programs signal that corporate compliance expectations are higher than ever. Compliance professionals must take these developments seriously and use them as a roadmap to strengthen our programs. Do not wait. Whether embracing new technologies, fostering a “speak up” culture, or aligning compensation with ethical behavior, now is the time to make the necessary investments in compliance.

Remember, when misconduct does occur, it’s better to be proactive and call the DOJ before they call you. By taking these lessons to heart and implementing them in our organizations, we can meet the DOJ’s expectations and contribute to building a culture of integrity and accountability that will serve our companies well in the long run.

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FCPA Compliance Report

FCPA Compliance Report: Spotlight on Executive at Risk: Latest Updates on The DOJ, OFAC, FCPA, and AML

Welcome to the award-winning FCPA Compliance Report, the longest running podcast in compliance.

In this edition of the FCPA Compliance Report, Tom welcomes back Miller & Chevalier attorneys Executives at Risk team, including Lauren Briggerman, Katherine Pappas, Ian Herbert, and their newest colleague Laura Deegan.

We dive into key compliance and enforcement topics such as the new DOJ whistleblower initiative, recent OFAC sanctions and export controls, key FCPA enforcement actions focusing on individual liability, and notable AML developments, particularly within the cryptocurrency sector. The discussion highlights the evolving landscape of corporate compliance and the increased need for robust internal reporting and proactive compliance measures.

Highlights in this Episode:

  • DOJ Whistleblower Initiative
  • OFAC Sanctions and Export Controls
  • FCPA Enforcement Actions and Developments
  • AML Developments and Binance Case

 

Resources:

Miller & Chevalier Chartered

Lauren Briggerman

Katherine Pappas

Ian Herbert

Laura Deegan

Executives at Risk, Summer 2024

Tom Fox

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For more information on the Ethico Toolkit for Middle Managers, available at no charge, click here.

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Compliance Into the Weeds

Compliance into the Weeds: The BCG Declination – Key Insights for Compliance

The award winning, Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. Looking for some hard-hitting insights on compliance? Look no further than Compliance into the Weeds!

In this episode, Tom Fox and Matt Kelly take a deep dive into the recent Department of Justice (DOJ) declination for the Boston Consulting Group (BCG).

They highlight why this case garnered significant attention and dissect the substantive actions BCG took to avoid prosecution, including firing implicated employees and forcing equity forfeiture. The duo also explores the seven factors that led to the declination, such as timely self-reporting, full cooperation, and improved compliance measures. The episode provides a comprehensive analysis of the BCG case, offering crucial takeaways for compliance officers on how to handle potential corruption issues and DOJ expectations.

Key Highlights:

  • Overview of the Boston Consulting Group Declination
  • DOJ’s Factors for Declination
  • Full Cooperation, Timely Self-Disclosure and Employee Consequences
  • Remediation Efforts and Compliance Improvements

Resources:

Matt in Radical Compliance

Tom in the FCPA Compliance and Ethics Blog

Tom 

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The Boston Consulting Group Declination: A Money Shot for Clawbacks

In a recent development that has garnered significant attention in the compliance community, the U.S. Department of Justice (DOJ) declined prosecution of Boston Consulting Group, Inc. (BCG) for violations of the Foreign Corrupt Practices Act (FCPA). Despite evidence of bribery involving BCG’s operations in Angola, the decision to forgo prosecution serves as a powerful reminder of the critical role that timely self-disclosure, cooperation, and effective remediation play in navigating the complexities of corporate compliance and, most significantly, clawbacks play in a decision to decline to prosecute. The decision was made public via a letter from the DOJ to BCG.

Between 2011 and 2017, BCG’s Lisbon, Portugal office engaged in a scheme to secure business contracts with Angolan government agencies, including the Ministry of Economy (MINEC) and the National Bank of Angola (BNA). BCG funneled approximately $4.3 million in commissions to an agent with close ties to Angolan government officials. These payments, made through offshore entities, helped BCG secure twelve contracts, resulting in revenues of $22.5 million and profits of $14.424 million.

The misconduct was serious: BCG employees in Portugal were aware of the agent’s ties to government officials and took deliberate steps to conceal the true nature of the agent’s work. This included backdating contracts and falsifying documents to cover up the corrupt activities. Such actions violated the FCPA, which prohibits U.S. companies from engaging in bribery of foreign officials to secure business advantages.

The money shot in this Declination was in the area of clawbacks. In the Wall Street Journal  (WSJ), Dylan Tokar wrote, “The consulting group’s disciplinary actions come amid pressure on companies by Justice Department officials to clawback compensation from employees involved in wrongdoing. Officials have said they want to shift the burden of penalties for corporate misconduct to those most responsible.” Mary Shirley, quoted by Tokar in the same article, noted, “That’s a strong message. While they’re not stated, the actual figures involved for individuals could be quite high.”

In his Radical Compliance piece on the Declination, Matt Kelly emphasized Shirley’s point: “That final point on surrendering equity — wow. That’s a punitive measure with real bite. Not only has BCG damaged the offenders’ future employment prospects by firing them and leaving a black mark on their records, but the loss of equity is a wallop to all their past employment with the firm. I have no idea how much that equity might have been worth, but BCG is a giant and prosperous business, so it’s entirely possible those offenders just lost millions of dollars.”

Given the severity of the misconduct, the DOJ’s decision to decline prosecution may seem surprising at first glance. However, more conduct was conducted by BSG after discovering the illegal conduct, which led to this superior result. The decline reveals that BCG’s response to finding the potential FCPA violation was exemplary, and equally importantly, it aligned with the DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy. These factors included:

  • Timely and Voluntary Self-Disclosure: In a 2014 email, BCG uncovered evidence of the potential FCPA violation and promptly disclosed the misconduct to the DOJ. This proactive step is crucial in the DOJ’s assessment of whether to pursue prosecution, as it demonstrates the company’s commitment to transparency and accountability.
  • Full and Proactive Cooperation: BCG did not merely disclose the misconduct; the company fully cooperated with the DOJ’s investigation. This included providing all relevant facts, including information about the individuals involved in the bribery scheme. Cooperation of this magnitude significantly mitigates the risk of prosecution, as it aids the government in its investigation and potential prosecutions of individuals responsible for the wrongdoing.
  • Comprehensive Remediation: BCG’s response to the misconduct was swift and decisive. The company terminated the personnel involved, imposed compensation-based penalties, and required implicated partners to forfeit their equity in the company. BCG also denied these individuals the financial transitions typically accorded to departing employees, underscoring the seriousness of the misconduct.
  • Significant Compliance Improvements: Beyond addressing the immediate issue, BCG substantially enhanced its compliance program and internal controls. These improvements included formalized employee training, vendor and client screening protocols, and the establishment of local and global risk committees. Such measures demonstrate BCG’s commitment to preventing future misconduct and fostering a culture of compliance.
  • Absence of Aggravating Factors: The DOJ’s decision was also influenced by the absence of certain aggravating factors, such as executive management’s involvement in the misconduct, significant profit relative to the company’s size, or a history of criminal recidivism. These factors often weigh heavily in the decision to prosecute, but in BCG’s case, their absence worked in the company’s favor.
  • Disgorgement of Ill-Gotten Gains: BCG agreed to disgorge $14.424 million, representing the profits from the contracts secured through the corrupt scheme. This financial penalty further reinforced BCG’s commitment to addressing the consequences of its actions and aligning with legal and ethical standards.

The BCG case offers several critical lessons for compliance professionals. First and foremost, the importance of timely and voluntary self-disclosure cannot be overstated. When a company discovers potential misconduct, promptly bringing it to the authorities’ attention can significantly influence the outcome, potentially leading to a declination of prosecution.

Full cooperation with government investigations is essential. Compliance teams must be prepared to provide all relevant information, facilitate interviews, and support the investigation process. This cooperation demonstrates the company’s commitment to addressing the issue and helps build a collaborative relationship with the authorities.

Remediation is another crucial aspect. Companies must swiftly and meaningfully address the root causes of misconduct, including holding individuals accountable and implementing robust compliance measures to prevent future violations. A strong compliance program, reinforced by ongoing training and risk assessment, is vital in demonstrating a company’s commitment to ethical business practices.

Finally, the BCG case underscores the importance of avoiding aggravating factors. Companies should strive to cultivate a culture of integrity from the top down, ensuring compliance is embedded in every aspect of the organization. By doing so, they can reduce the likelihood of misconduct occurring in the first place and mitigate the impact if it does.

The DOJ’s decision to decline BCG’s prosecution is a powerful reminder of the value of self-disclosure, cooperation, and remediation in corporate compliance. For compliance professionals, the BCG case highlights the critical role they play in guiding their organizations through complex legal and ethical challenges. By fostering a culture of compliance, responding proactively to potential issues, and working closely with authorities, companies can navigate the difficult terrain of regulatory enforcement while upholding their commitment to ethical business practices.

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Daily Compliance News

Daily Compliance News: August 16, 2024 – The All Law360 Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee and listen to the Daily Compliance News. All from the Compliance Podcast Network.

Each day, we consider four stories from the business world: compliance, ethics, risk management, leadership, or general interest for the compliance professional.

In today’s edition of Daily Compliance News:

  • DOJ defends itself from Boeing victims’ families’ objections. (Law360)
  • Missouri anti-ESG rules for financial advisors are illegal. (Law360)
  • How to keep layoffs from going viral. (Law360)
  • Overstock Ex-CEO attorney DQ’d from the case. (Law360)

For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.

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FCPA Compliance Report

FCPA Compliance Report: Exploring DOJ’s New Whistleblower Incentive Program with Mary Inman

Welcome to the award-winning FCPA Compliance Report, the longest running podcast in compliance. In this edition of the FCPA Compliance Report, Tom Fox welcomes back Mary Inman, Partner at Whistleblower Partners LLC, to discuss the new DOJ Whistleblower Incentive Program.

Tom and Mary discuss the DOJ’s New Whistleblower Incentive Program’s aim to fill gaps in existing reward programs and its focus areas, including financial institution violations, foreign and domestic corruption, and healthcare offenses. Mary highlights some criticisms of the program, such as lack of a reward floor and the cap on rewards, and the potential challenges and impacts on corporate compliance. They also talk about the interplay between whistleblowers, DOJ, and corporate investigations, and the potential for adaptation of the program based on stakeholder feedback.

Highlights in this Episode:

  • DOJ Whistleblower Incentive Program Overview
  • Four Focus Areas of the New Program
  • Challenges and Criticisms of the Program
  • Concerns About Reward Mechanisms
  • Race to DOJ: Whistleblowers vs. Corporations
  • Implications for Corporate Compliance

Resources:

Mary Inman on LinkedIn

Whistleblower Partners

Tom Fox

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For more information on the Ethico ROI Calculator and a free White Paper on the ROI of Compliance, click here.