DOJ’s New Enforcement Strategy Pushes Companies to ‘Own Up’ to Crime

The U.S. Department of Justice (DOJ) is using a combination of carrots and sticks to encourage banks and other corporations to proactively report misconduct by their employees, while ramping up scrutiny of cryptocurrency scams, according to a senior official.

The DOJ is changing its approach to corporate criminal enforcement by allowing companies to avoid pleading guilty if they voluntarily disclose wrongdoing, Marshall Miller, principal associate deputy attorney, said in prepared remarks on Dec. 6.

In addition to voluntary disclosure, companies would have to fully cooperate on remedial actions. The DOJ also will not require an independent compliance monitor if the company has rolled out an effective compliance program.

While speaking at a conference held by the American Bankers Association in Maryland, Miller noted that all elements of the DOJ that handle corporate crime cases are updating their policies accordingly, building upon a framework announced in September by Deputy Attorney General Lisa Monaco.

“When misconduct occurs, we want companies to step up and own up,” Miller said. “When companies do, they can expect to fare better in a clear and predictable way.”

To give the policy more teeth, the DOJ is pushing corporations to adopt compensation clawback measures, which financially penalize executives and other employees whose actions or omissions led to criminal conduct.

A major test of the department’s policy was the resolution of a case on Dec. 2 involving ABB Ltd., a Swiss engineering company that agreed to pay $315 million to end a multinational investigation into a bribery scheme in South Africa.

Two of ABB’s subsidiaries pleaded guilty to conspiracy to violate the U.S. Foreign Corrupt Practices Act, and the parent company entered into a three-year deferred prosecution agreement with the DOJ. ABB took active steps to report the wrongdoing to the DOJ and the Securities and Exchange Commission.

Miller also addressed the burgeoning fraud and criminal activity in the cryptocurrency sector, citing several instances of “law enforcement disruptions” where the DOJ t0ok action against scammers and ransomware actors and helped seize and recover ill-gotten digital assets.

“The department has been closely tracking the extreme volatility in the digital assets market over the past year,” he added.

The warning may have referred to the collapsed crypto exchange FTX, whose founder, Sam Bankman-Fried, admitted that he doesn’t know what happened to billions of dollars of customer funds. The DOJ’s Office of the U.S. Trustee—the agency’s bankruptcy watchdog—called for an independent investigation into FTX on Dec. 1.

Within the last year, the DOJ has created two new groups related to digital assets: the National Cryptocurrency Enforcement Team at DOJ headquarters and the Digital Assets Coordinators in the offices of all 94 U.S attorneys, Miller said.

The Federal Bureau of Investigation has also launched a new unit that will work closely with the two groups to probe illicit use of virtual assets.

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Greg Isaacson spent 7 years in China and Thailand researching and reporting on business and real estate in Asia, with a focus on commercial real estate in Chinese-speaking markets as well as outbound investment from China. He has also worked as a real estate research analyst in Chicago and a real estate reporter in New York.

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