The fundamental components of effective corporate compliance programs have not changed significantly in recent years.1 However, United States enforcement authorities are trying to reinvigorate companies’ attention to those programs.
U.S. Department of Justice leaders expressed particular concern this year about whether companies have appropriately integrated their compliance departments. In March 2022, the assistant attorney general for the U.S. Department of Justice’s Criminal Division — a former corporate chief compliance officer — described his perception of compliance professionals’ environments: “I know the resource challenges. The challenges you have accessing data. The relationship challenges. The silo-ing of your function.” He warned companies: “Support your compliance team now or pay later.”2
The United States deputy attorney general repeated these concerns in September 2022, explaining that “resourcing a compliance department is not enough; it must also be backed by, and integrated into, a corporate culture that rejects wrongdoing for the sake of profit.”3 The remarks accompanied her release of a memorandum that federal prosecutors must follow when evaluating the strength of a company’s compliance program in determining how to resolve an investigation.4 The memorandum challenges companies to ensure that compliance programs have the highest levels of company attention, are resourced appropriately and do not operate in silos.5
The emphasis on compliance program integration warrants close attention in 2023. Summarized below are four actions companies should consider to help ensure that their compliance programs are optimized and effectively positioned to respond to government review, along with the business functions that typically should participate. This is of course not an exhaustive list of aspects of compliance programs that warrant attention, but rather suggestions on elements that would likely benefit from a fresh look.
Action: Review compensation agreements and incentives with senior leadership, business team leaders, sales professionals, third-party agents and possibly others to ensure structures promote compliance and define consequences for misconduct.
Functions Involved: compliance, legal, human resources, business team leaders, compensation committee
The U.S. deputy attorney general’s memorandum provides the Department of Justice’s first formal guidance on evaluating companies’ compensation plans and agreements in connection with resolutions of criminal investigations. The most significant plans and agreements for compliance purposes are likely to involve senior executives responsible for leading functions and the company’s tone at the top; sales team leaders and sales professionals including third-party agents whose compensation might be influenced by sales volume; and professionals who routinely communicate with government officials, including employees of state-owned enterprises.
The U.S. deputy attorney general recommends…
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