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“If your company has had a recent brush with the law, now is the time to invest — and reinvest — in your compliance programs. I can assure you the price of committing another violation will be far higher than the cost of preventing one.” – Deputy Attorney General Lisa Monaco
Last week, senior Department of Justice leadership announced new policies and programs intended to further its “carrot and sticks” approach to corporate criminal enforcement, which has borne fruit with twice as many voluntary self-disclosures in 2023 when compared to 2021.
Pilot Whistleblower Rewards Program
Deputy Attorney General Lisa Monaco announced a new pilot program for whistleblowers. If an individual provides information to the DOJ on significant financial misconduct, the individual may receive a portion of the resulting forfeiture. This is intended to fill gaps in existing SEC, CFTC, FinCEN, and other whistleblower programs. A deadline of 90 days has been announced for the pilot program, which will be led by the Department’s Money Laundering and Asset Recovery Section.
Notably, rewards would be available only:
- After all victims have been compensated;
- To those who submit information that DOJ did not already know, described as “original, nonpublic, truthful information”;
- To those who did not participate in the criminal activity; and
- In circumstances where there was not already a pre-existing financial disclosure incentive (e.g., qui tam or another federal agency’s whistleblower program).
The DOJ may establish a monetary threshold for these matters to ensure that the focus is on “significant and impactful” actions. DOJ leaders stated that the new whistleblower program could prove useful in developing foreign corruption cases involving private companies, including those brought under the newly enacted Foreign Extortion Prevention Act.
AI Compliance
Monaco also discussed a new and emerging threat in criminal enforcement: artificial intelligence (AI). In addressing this threat, Monaco made it clear that fraud can exist in many forms within AI, from price-fixing to market manipulation.
With that in mind, prosecutors will seek stiffer sentences “where AI is deliberately misused to make a white-collar crime significantly more serious” for both individual and corporate defendants, according to Monaco. Importantly, DOJ prosecutors, when evaluating a company’s compliance program, will now consider how well that program can mitigate AI risk and use this factor in assessing whether the compliance program is effective. Monaco stated that prosecutors will assess: (1) how well a company’s compliance program mitigates the risk of misusing AI and (2) a company’s ability to manage AI-related risks as part of its overall compliance efforts.
The Criminal Division will incorporate risks associated with AI into its guidance on Evaluation of Corporate Compliance Programs. These comments follow the recent announcement of a new initiative called “Justice AI,” which assembles stakeholders from various industries, ranging from law enforcement personnel to civilians, to gather insights and perspectives on AI.
The major takeaway from the Department of Justice’s recent announcement concerns AI. The development of AI has the capacity to provide efficiencies on a scale previously unrealized. However, the DOJ is anticipating and preparing for AI’s illicit uses. More importantly, the DOJ is expecting companies to proactively retool their compliance programs to identify and address potential threats posed by AI and factoring that into its corporate resolution determinations.
