DOJ’s Criminal Division Announces Revised Corporate Enforcement Policy

On January 17, 2023, Assistant Attorney General for the Criminal Division (“AAG”) Kenneth A. Polite, Jr. announced significant revisions to the U.S. Department of Justice, Criminal Division, corporate criminal enforcement policy (“CEP”).[1] The new CEP changes offer additional incentives to companies for voluntary self-disclosures, cooperation, and remediation.  The new CEP reflects an increased emphasis on voluntary self-disclosure and cooperation, and also constitutes a formal name change to the “Corporate Enforcement and Voluntary Self-Disclosure Policy,” replacing the prior version of the CEP in the Justice Manual (JM 9-47.120).  The revisions come in response to Deputy Attorney General Lisa O. Monaco’s request in September 2022 that all U.S. Department of Justice (“Department” or “DOJ”) components clarify the benefits of voluntary self-disclosure so that corporate decisionmakers can better understand the potential benefits and decide whether voluntary self-disclosure is in the company’s best interests.  We expect that other Department components will issue similar guidance following the Criminal Division’s recent CEP updates. 

Since launching its voluntary self-disclosure incentive program in 2016, the Department has repeatedly stressed that when a company discovers criminal misconduct “the clearest path for a company to avoid a guilty plea or an indictment is voluntary self-disclosure.”[2]  However, the Department acknowledged the difficult choice facing companies considering voluntary self-disclosure of alleged misconduct, particularly when aggravating factors may prevent a company from obtaining a declination.  In these instances, rational companies may decide that the potential benefits of self-disclosure do not outweigh the risks, and may instead elect not to disclose such misconduct.  The revisions to the CEP attempt to address these concerns by rewarding companies that have implemented robust compliance programs and who have made “extraordinary” efforts to remediate and cooperate with the Department.

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Analysis of Expected and Recent Developments in Congressional Oversight & Investigations in the 118th Congress

This month, the 118th Congress convened in Washington, D.C., ushering in a return to divided government. Republicans now hold a narrow majority in the House of Representatives, while Democrats have retained their slim Senate majority. With few opportunities likely for bipartisan compromise, Congress is expected to engage in more frequent and more partisan congressional investigations.   Our colleagues at our Capital Insights blog take a look at what congressional oversight trends are already taking shape.  Check out the full post here.

Compliance Risks for Remote and Hybrid Working Models

With the cold and flu season underway and COVID-19 still ever-present, it is a good time to take stock of the potential risks that come with working remotely.  Following the lifting of pandemic restrictions allowing offices to open back up, many companies continued to offer work from home or hybrid arrangements.  It is important for companies to continue monitoring adherence to the policies and procedures designed to accommodate the new working models.

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DOJ FCPA Unit Officials’ Take on 2022

Counsel of choice is important

In an onstage interview at the American Conference Institute’s 39th International Conference on the Foreign Corrupt Practices Act David Last, Chief of the FCPA Unit of Department of Justice, Criminal Division, Fraud Section, and David Fuhr, the Unit’s Assistant Chief, reflected on the year’s most pressing enforcement issues.

Acknowledging that 2022 had been difficult for DOJ’s prosecution of individuals under the FCPA in light of Hoskins II,[1] Last and Fuhr commended their Unit’s efforts, stating that the Unit is not afraid to take tough cases when there is sufficient evidence. Even though these individual cases can be challenging, “this is part of our mission,” Last and Fuhr stated. They continued that, despite the outcome in the Hoskins II decision, DOJ’s prosecution of individuals will remain a constant goal of the FCPA Unit, particularly those individuals on the supply side and any intermediaries.

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Corporate and White-Collar Enforcement in 2023–24

As 2022 comes to a close, is it possible to predict a trend for corporate and white-collar enforcement by the U.S. Department of Justice in 2023? Yes: enforcement will increase in 2023, and it will increase yet more in 2024. Understanding the Department as a dispersed, human institution that responds to incentives explains why.

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Increasing US Enforcement Action for Sanctions Violations by Crypto Exchanges Likely to Have Ripple Effect in UK and Europe

The investigation and enforcement of potential sanctions violations by crypto exchanges is an area of focus in the US at present.  The US Department of the Treasury’s Office of Foreign Assets Control’s (OFAC) recent
settlement with Kraken, a global virtual currency exchange, is the most recent OFAC case demonstrating the risks for virtual currency platforms that process transactions without comprehensive sanctions controls.  Kraken agreed to pay USD 362,158.70 to settle its potential civil liability for alleged breaches of the Iranian Transactions and Sanctions Regulations and also agreed to invest USD 100,000 in the implementation and improvement of its sanctions compliance controls.  The indications are that this enforcement trend will develop across the UK and Europe in 2023, as regulators in both jurisdictions are looking to bring crypto exchanges generally more into the regulatory fold.

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Welcome to Global Investigations & Compliance Review

This year has brought remarkable change around the globe – including new administrations, changing regulatory approaches, conflicts, and rapidly evolving global sanctions. Staying on top of how these changes impact businesses, individuals and sovereign entities is a challenge that Squire Patton Boggs’ Government Investigations & White Collar team is dedicated to helping our clients manage. Our new blog provides timely content about how to navigate the global investigations, compliance, and enforcement landscape strategically and effectively.

Please continue to visit Global Investigations & Compliance Review, where you will find the most recent information and insights related to investigations, sanctions, compliance, and anticorruption.

OFAC Announces Settlement with Virtual Currency Exchange Kraken

On November 28, 2022, the Office of Foreign Assets Control (“OFAC”) announced a settlement agreement with Payward, Inc., known as Kraken (“Kraken”), a United States-based virtual currency exchange. Kraken agreed to pay $362,158.70 to resolve its potential civil liability for 826 apparent violations of the Iranian Transactions and Sanctions Regulations (“Apparent Violations”). The settlement amount is significantly less than the statutory maximum civil monetary penalty of $272,228,964, reflecting OFAC’s determination that the Apparent Violations were non-egregious and voluntarily self-disclosed, thereby lowering the base civil monetary penalty, and that the base amount warranted further adjustment based on several mitigating factors, including significant remedial measures.  Kraken will also invest $100,000 in additional sanctions compliance controls.  The settlement is part of recent efforts by the Department of the Treasury relating to virtual currency, including recent OFAC and Financial Crimes Enforcement Network enforcement actions, OFAC’s sanctioning of virtual currency mixer Tornado Cash, and Department of  the Treasury reports on digital assets.

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UAE Ministry of Justice Confirms Reciprocity with the English Courts

On September 13, 2022, Judge Abdul Rahman Murad Al-Blooshi, Director of the International Cooperation Department of the UAE Ministry of Justice, issued a communiqué to His Excellency Tarish Eid Al-Mansoori, Director General of the Dubai Courts, directing the Dubai Courts to enforce judgements issued by the English Courts (the “Directive”).  This follows the English Courts’ decision in Lenkor Energy Trading DMCC v Puri [2021] EWCA Civ 770 to enforce a judgment of the Dubai Courts concerning dishonored cheques.

The pro-enforcement Directive might foreshadow an increasing number of enforcement actions by judgement creditors of the English Courts against assets domiciled in Dubai.

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Fourth Circuit Extends Territorial Reach of Wire Fraud Statute

The United States may prosecute foreign fraudsters using U.S. wires when their entirely foreign-based schemes use U.S. wires to victimize persons in the United States. That is the conclusion we draw from the Fourth Circuit’s decision in United States v Elbaz. The Elbaz court joined the Ninth Circuit in holding that the wire-fraud statute’s focus on the misuse of U.S. wires meant that the prosecution of any foreign scheme is a permissible domestic application of the statute as long as there is a wire transmission in the United States. The decision probably represents the outer limits of the statute’s permissible domestic application, though it denies the government the unfettered extraterritorial reach – a power the government previously sought.

But striking is the court’s discussion of the permissible geographic reach of the wire-fraud conspiracy statute (which carries the same heavy penalties as the wire-fraud statute). The court concludes that the conspiracy statute can reach any foreign conspiracy to commit wire fraud, irrespective of the fraudsters’ or victims’ geographic locations. In other words, U.S. law enforcement may now be able to prosecute entirely foreign conduct harming foreign victims; all that is needed is the intended use of a U.S. wire to further the fraudulent scheme that is the object of the alleged conspiracy.

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