Yesterday, the Department of Justice (DOJ) released its first-ever Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP).  The CEP is applicable to all corporate criminal matters except antitrust violations. DOJ announced the policy as a significant step toward uniformity and predictability in federal corporate criminal enforcement. The most prominent feature of the CEP is the Part I declination policy, which states that DOJ “will decline to prosecute a company for criminal conduct” when four specific factors are satisfied. Under Part I, a declination is warranted when: (1) the company voluntarily self-disclosed the misconduct to the appropriate DOJ criminal component; (2) the company fully cooperated with the Department’s investigation; (3) the company timely and appropriately remediated the misconduct; and (4) no aggravating circumstances related to the nature or seriousness of the offense are present.  If aggravating circumstances exist, prosecutors still retain discretion to nevertheless recommend a declination by weighing those circumstances against the company’s self-disclosure, cooperation, and remediation efforts. Companies receiving a Part I declination will still be required to pay all applicable disgorgement, forfeiture, restitution, and victim compensation amounts, and all declinations will be made public.

For situations that fall short of a full declination, CEP Part II creates a structured two-tier alternative. Under Part II, companies that fully cooperated and remediated are entitled to a Non-Prosecution Agreement (NPA) if they either (a) made a good-faith self-report that did not technically qualify as a “voluntary self-disclosure” as defined in Appendix B of the policy, or (b) had aggravating factors warranting a criminal resolution.  In the absence of particularly egregious or multiple aggravating circumstance, the Part II NPA will have a term of fewer than three years, no requirement for an independent compliance monitor, and a fine reduction of between 50% and 75% below the low end of the U.S. Sentencing Guidelines (U.S.S.G.) range. Companies that do not qualify for Part I or Part II will receive the least favorable treatment under Part III, where prosecutors retain broad discretion over resolution form, term length, compliance obligations, and monetary penalties. Even in Part III cases, however, the Policy establishes a floor: the Department will not recommend a fine reduction of more than 50% off the applicable range. Part III applies a presumption that any reduction will be measured from the low end of the guidelines range for companies that fully cooperate and remediate; for those that do not prosecutors will use other points within the range based on the circumstances—including recidivism.

DOJ’s new CEP does not exist in isolation.  Rather, it joins stands alongside well-established agency-level voluntary disclosure programs that companies must navigate in parallel. Both the Environmental Protection Agency (EPA) and U.S. Coast Guard have established Voluntary Disclosure Policy, which offer penalty mitigation and, in appropriate cases, declination of criminal referrals to DOJ for companies that self-disclose environmental violations discovered through compliance auditing. Similarly, the Treasury’s Office of Foreign Assets Control (OFAC) maintains a Voluntary Self-Disclosure (VSD) program under which companies that self-disclose apparent sanctions violations receive a 50% reduction in the base civil monetary penalty, and where OFAC expressly considers voluntary disclosure as a significant mitigating factor in determining whether to refer a matter to DOJ for criminal action. While each of these frameworks operates independently and retains its own procedural and substantive requirements, the new DOJ CEP now provides yet another layer: a company that has made disclosure to a sector-specific agency such as EPA, the Coast Guard, or OFAC should carefully evaluate whether—and how promptly—that disclosure must also be made to the appropriate DOJ criminal component to preserve eligibility for a Part I declination, since the CEP generally requires disclosure to DOJ directly and treats agency-only disclosures as qualifying only in limited circumstances at prosecutorial discretion. The full text of the DOJ press release and the CEP policy document are available online at the Department of Justice website.

The CEP offers very strong incentives for voluntary disclosures of potentially criminal conduct if a company acts consistently with the Policy.  Companies should engage legal counsel promptly to preserve the opportunity to take the best advantage of the CEP’s benefits. If you have any questions concerning the CEP, please contact us at info@chaloslaw.com.