The Fraud Section of the U.S. Department of Justice (DOJ) has published guidance that reiterates the importance of culture in establishing and maintaining an effective compliance program.
This represents the Fraud Section’s first formal guidance since hiring Hui Chen as its resident compliance expert in November 2015.
While the contents aren’t new, it does offer useful insights for compliance professionals in crafting and strengthening corporate compliance policies.
They can use the guide to get an idea of what to expect if they face a DOJ investigation, which includes a list of “important topics and sample questions.”
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The guide explains government considerations for corporate misconduct prosecutions
Federal prosecutors must consider 10 so-called “Filip Factors” when determining whether to bring a charge of corporate wrongdoing.
This includes the existence and effectiveness of any remedial efforts a company undertakes with respect to a corporate compliance program.
The Guide was issued to help clarify what the DOJ considers when reviewing compliance programs under these factors during the course of an investigation and/or prosecution for corporate wrongdoing.
DOJ recognizes that risk profiles and compliance measures vary, requiring an individualized determination in each case.
However, the Guide provides a comprehensive list of questions under 11 topics commonly involved in making such determinations.
Furthermore, while these questions refer to DOJ’s evaluation after a compliance failure has occurred, the Guide remains useful for internal assessments of existing compliance programs and understanding the best way to minimize liability when problems arise.
Leadership’s commitment to compliance is central for success
Since policies and procedures make up the heart of compliance programs, a considerable portion of the Guide addresses these issues.
This includes whether a company has implemented and communicated them effectively and evaluated their usefulness.
As a whole, however, the Guide clearly aligns with Ms. Chen’s belief in the importance of a company-wide commitment to compliance.
In particular, Ms. Chen has emphasized the vital role of leadership in compliance and the view that no matter how well-designed a compliance program, it will not be sufficient if leadership is not actively fostering a culture of compliance throughout the company.
Effective compliance is a constant effort
The Guide puts companies on notice that strong written policies and procedures are not enough.
Rather, prosecutors will look into how the company implemented, updated and enforced its program, considering factors such as:
- Has the company performed a risk assessment and tailored their compliance program to their specific needs, risks, and challenges?
- What value does the company assign to compliance?
- How much experience, resources and authority does the company grant compliance personnel?
- What concrete actions have [leaders] been taken to demonstrate leadership in the company’s compliance and remediation efforts?
- Is the company proactively addressing third-party risks?
- Did the company re-evaluate its entire program following a compliance failure?
DOJ covers a wide range of issues in the Guide and makes it clear that companies will only satisfy regulatory expectations by implementing policies and procedures effectively, frequently assessing and updating the same and using appropriate incentives and disciplinary measures to enforce them consistently.
One of the first steps for putting policies and procedures into practice is communicating their importance to employees.
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