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13 Int'l. In-House Counsel J. 1 (2020)

handle is hein.journals/iihcj13 and id is 1 raw text is: International In-house Counsel Journal Vol.13, No. 50, Winter 2020, 1 Critique of the U.S. Department of Justice Evaluation of Corporate Compliance Programs BRUCE ORTWINE General Counsel, Americas; Adviser, Global Legal and Compliance; Senior Executive Vice President, Sumitomo Mitsui Trust Bank, Limited, USA Introduction: On April 30, 2019, the U.S. Department of Justice, Criminal Division (the DOJ) published updated guidance (the DOJ Guidance) on the evaluation of a company's corporate compliance program (a CCP). The evaluation is to be considered by DOJ white-collar criminal prosecutors in the event that a criminal offense is committed by an employee or third-party agent or contractor of the company. The evaluation of the CCP is offered as guidelines both to a company to determine the extent to which its own CCP compares with the requirements of the DOJ Guidance, and to prosecutors to determine whether to prosecute the company itself for the misconduct of its employee or third party agent or contractor. While the DOJ Guidance provides transparency on the required components of an effective CCP, it fails to provide transparency on whether an effective CCP will spare a company from criminal prosecution. Background: In recent years, legal and regulatory requirements have significantly increased for companies operating in the U.S. and abroad. Federal and state criminal laws have been aggressively enforced for numerous types of criminal misconduct, including for crimes relating to bribery of foreign government officials and otherwise corrupt conduct, and money laundering. Moreover, a number of federal criminal laws have extraterritorial, or global, jurisdiction, meaning that a company-whether U.S. or foreign having contacts with the U.S.-may be criminally prosecuted in the U.S. for criminal misconduct that takes place outside the U.S. Companies are required to have CCP's that are both in effect and appropriately enforced. The scope of a CCP should mirror the scope of the company's business activities, customer base and geographic locations in which it conducts its activities. Certain types of business activities (e.g., financial service activities), customers (e.g., cash-intensive businesses) and geographic locations (e.g., countries known as drug havens or having corrupt governments) are considered inherently high risk in nature. Companies need to develop comprehensive CCP's that include policies, procedures and controls that mitigate those risks, and need to train and otherwise communicate to their employees and third parties about the requirements of full compliance with all applicable laws and regulations. The Importance of a Risk Assessment: The starting point of a CCP is a risk assessment, which identifies the risks, assesses the likelihood of occurrence and severity if there is an occurrence of misconduct, controls that are currently in place, assessment of the relative effectiveness of those controls (e.g., do they prevent misconduct, deter misconduct or merely inform as to the consequences of misconduct), determines the gaps that exist between the nature of the risk and existing controls and how those gaps can be mitigated, implements an action plan for remediation of the gaps within specified timeframes, and then continuously monitors and otherwise tests for new risks, effectiveness of controls, etc. ISSN 1754-0607 print/ISSN 1754-0607 online International In-house Counsel Journal