Preferred Qualities of Compliance Programs

October 27, 2022

Recent guidance from the U.S. Department of Justice (DoJ) provides important insight into the qualities that the U.S. Government deems to be important when assessing corporate compliance programs.  Although the guidance, which was issued by Deputy Attorney General Lisa Monaco on September 15, 2022, is addressed to Federal prosecutors, its substance provides useful guidance for entities seeking to encourage robust corporate policies that, when implemented, incentivize constructive individual and organizational behavior.

The guidance expresses the general view that a fundamental hallmark of a strong compliance program is its consistency.  Thus, a long-standing compliance program is considerably more valuable than a program (or aspects of a program) of very recent vintage that is implemented only after a discrete compliance problem arises.

The guidance further asserts that strong compliance programs are those that foster a resilient culture of compliance at all levels of the entity.  Furthermore, an organization’s commitment to a strong compliance culture may be reflected in how employees are incentivized to prize compliance, as well as whether (and how) they are sanctioned for deviations from compliance policies or procedures. 

Additional factors that the DoJ guidance highlights are objective indicators that the compliance program is “well designed, adequately resourced, empowered to function effectively, and working in practice.”  Practical manifestations of a mature compliance program include the establishment of metrics to measure and identify common risk areas, such as:  financial fraud, how disciplinary matters related to compliance deviations and associated personal accountability are handled the entity’s human resources office, and tangible examples of how an organization’s senior leadership collectively create and promote a strong compliance culture within the organization.  In each of these practical areas, actions are as important as the existence of any written policy or procedure.

Although revelatory in terms of articulating what the government seeks in corporate compliance programs in the context of criminal prosecutions, the guidance is generally useful as a clearly-articulated set of benchmarks.  Against these benchmarks, institutions may assess the relative strength of their individual compliance program, and choose to adopt those criteria that may not be a component of the program already.