U.S. Department of Justice Announces Nationwide Voluntary Disclosure Policy for Corporate Criminal Wrongdoing

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On February 22, 2023, the Department of Justice announced a new nationwide corporate voluntary disclosure policy promising significant benefits and leniency for companies that voluntarily disclose potential criminal wrongdoing before the government finds out or is about to find out about it.  The new policy follows up on Deputy Attorney General Lisa Monaco’s September 15, 2022 memorandum, in which she directed “each Department of Justice component that prosecutes corporate crime to review its policies on corporate voluntary self-disclosure, and if the component lacks a formal, written policy to incentivize such self-disclosure, it must draft and publicly share such a policy.” The new DOJ policy instead adopts a nationwide policy applicable to all United States Attorney’s Offices (footnote 4 and the accompanying text in the February 22 DOJ policy memorandum explains that, because various components at DOJ headquarters have their own voluntary disclosure policies, there will have to be coordination in cases handled jointly by a U.S. Attorney’s Office and such a main Justice component).

Although it remains to be seen how the new DOJ policy will apply in practice, and there are various exceptions and caveats to give prosecutors flexibility, the core provisions of the new policy are as follows:

  • A company’s disclosure must truly be voluntary and not required by a regulation, prior agreement with DOJ, or other obligation.
  • A company’s disclosure must be timely, i.e., before the government knows about potential criminal wrongdoing or there is an imminent threat that the government will learn of it. Disclosure of alleged misconduct by corporate whistleblowers does not count as voluntary disclosure by the company. Disclosure must also occur within a reasonable time after the company becomes aware of the misconduct.
  • A company’s disclosure must include all relevant facts relating to the wrongdoing, or the company can make clear that it is making a preliminary disclosure while it investigates further.
  • The DOJ will not seek a criminal guilty plea from a company that meets the voluntary disclosure standards above, except in cases that involve aggravating factors such as threats to national security or public health, pervasive wrongdoing within the company, or misconduct by current corporate management.
  • The DOJ may elect to impose no criminal penalty at all for a company that meets the voluntary disclosure standards, but if it does the penalty will be 50% below the low end of the U.S. Sentencing Guidelines fine range for the conduct at issue. (Without a guilty plea, such penalties would likely be part of a deferred prosecution or non-prosecution agreement.) The DOJ may still recommend leniency at sentencing (50% to 75% fine reduction) in cases where aggravating factors are present.
  • The DOJ will not require an independent compliance monitor if the company meets the voluntary disclosure standards and has implemented its own effective compliance policy by the time it resolves the matter with the DOJ.

Companies that are aware or become aware of wrongdoing should consider the new DOJ policy in connection with decisions about whether and when to disclose potential misconduct to the DOJ. In addition, time will tell whether the new policy’s promise that the DOJ will forego seeking a criminal guilty plea in cases where a company voluntary discloses means that the DOJ will more likely seek a guilty plea where voluntary disclosure does not occur.