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Corporate Compliance Chiefs Gain ‘Stature’ in DOJ Policy Shift

March 22, 2022, 8:26 PM

The Justice Department is tightening its corporate resolution policies in an effort to give chief compliance officers greater authority to voice concerns internally about their company’s process for preventing misconduct.

DOJ’s Criminal Division will direct prosecutors to “consider requiring” chief compliance officers and CEOs to certify at the end of a settlement term that “the company’s compliance program is reasonably designed and implemented to detect and prevent violations of the law and is functioning effectively,” the division’s leader, Kenneth Polite, said at a conference of compliance professionals on Tuesday in Hollywood, Fla.

The step is designed to ensure CCOs “receive all relevant compliance-related information and can voice any concerns that they may have prior to certification,” Polite told the ACAMS AML and Financial Crime Conference.

Chief compliance officers contend with resource challenges and siloed job functions, said Polite, who was previously a CCO at the energy company Entergy Corp. The department wants CCOs to have “true independence, true authority, and true stature within your companies.”

The announcement will apply to guilty pleas and to deferred or non-prosecution agreements, Polite said.

Previously, DOJ would mandate at the conclusion of corporate resolutions that the CEO and chief financial officer attest they’ve met obligations to disclose any evidence of misconduct during the term of the agreement.

In bolstering the certification process to cover compliance, it’s unclear how the department would interpret that compliance program is “reasonably designed.” Still, the policy is the latest step in the department’s mission to convince companies to invest in internal compliance operations that proactively weed out criminal behavior, such as money laundering and securities fraud.

That includes a declaration from Deputy Attorney General Lisa Monaco last fall that prosecutors would favor the imposition of independent compliance monitors to ensure companies remain faithful to their resolution. DOJ made good on that policy in two settlements late last year in which companies were subjected to outside monitors after DOJ determined their compliance programs hadn’t been fully implemented or tested to prove they’d prevent and detect future violations.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Tom P. Taylor at ttaylor@bloomberglaw.com; John Crawley at jcrawley@bloomberglaw.com