Treliant Takeaway…United States Attorney’s Offices Voluntary Self-Disclosure Policy Update

United States Attorney’s Offices Voluntary Self-Disclosure Policy Update

• Source: Justice.gov

Treliant Takeaway:

Possessing the ability to timely identify, and more importantly remediate, potential misconduct is vital in this heightened regulatory environment. Treliant’s Global Financial Crimes Compliance (GFCC) team can assist in developing and maintaining effective corporate compliance programs for financial institutions of all sizes.

Highlights:

On February 22, 2023, the U.S. Department of Justice (DOJ) announced the Voluntary Self-Disclosure Policy (VSD Policy) that applies to all U.S. Attorney’s Offices (USAOs). Effective immediately, the VSD Policy aims to reward self-disclosure by setting forth standardized criteria that will result in tangible incentives. Before this updated policy, the process of self-disclosing corporate criminal conduct was not transparent or predictable. The USAOs historically have lacked formal policies for self-disclosing misconduct and applied varying approaches across all jurisdictions.

Please note, if a company is considering self-disclosing misconduct it should understand that the criteria set forth in the USAO VSD Policy does not override criteria set forth in other government entity policies. If the USAO is cooperating with another agency, such as the Criminal Division, the USAO will seek approval from that agency to implement their own VSD Policy if it deems it necessary.

1. Standards of Voluntary Self-Disclosure (VSD)
   The USAO will require that a disclosure meet each of the following standard for it to constitute a VSD:
   1. Voluntary in Nature
      The disclosure must be voluntary. Any conduct disclosed pursuant to an existing obligation, such as a Deferred Prosecution Agreement (“DPA”), will not be deemed a VSD.
   2. Timing
      A disclosure must be made to the USAO:
      1. Prior to an imminent threat of disclosure or government investigation
      2. Prior to public disclosure or government knowledge
      3. Within a “reasonably prompt” time after the company becomes aware of the misconduct, and the company carries the burden of demonstrating timeliness
   3. Disclosing all Relevant Facts
      In order for a disclosure to qualify under this new VSD Policy, the company must include all relevant facts concerning the misconduct.It should be noted that even if disclosures meet all of the above criteria, if the company does not fully cooperate by continuing the investigation, preserving evidence and updating the DOJ, the VSD may not be accepted by the USAO. Additionally, timely remediation is also required, which may include forfeiture or restitution of gains from misconduct.
2. Benefits of the VSD Policy
   1. Credit for VSD, Cooperation and Remediation
      Companies that meet the requirements set forth above without any aggravating factors can expect the USAO to:
      1. Not require a guilty plea
      2. Not seek a criminal penalty, or, if a penalty is warranted, impose a penalty that is at least 50% reduced from the low end of the applicable U.S. Sentencing Guidelines (U.S.S.G.) fine range; and
      3. Not impose an independent compliance monitor
         Aggravating factors do not eliminate the benefits of self-reporting, but they do diminish them. DOJ considers aggravating factors to include:
      4. misconduct that poses a grave national security, public health, or environmental threat
      5. is deeply pervasive at the company; or
      6. involves current executive management of the company
         No one factor will require a guilty plea; the USAO will assess the circumstances and individual facts to determine the appropriate resolution. Importantly, even if a guilty plea is required for a company, it will still receive other VSD Policy benefits, including a 50%–75% reduction off of the low end of the U.S.S.G. fine range and no imposition of a compliance monitor
   2. Effective Compliance and Independent Monitors
      The USAO will not impose an independent compliance monitor if a company self-discloses misconduct, properly remediates the misconduct and at the time of resolution, demonstrates that it has implemented an effective compliance program. This decision is at the sole discretion of the USAO and will be evaluated on a case-by-case basis.