The Urgency of Ethics and Compliance – The Biden Administration and Enforcement

The Biden Administration has a lot on its plate – that is obvious.  Tackling the COVID-19 pandemic and restoring economic growth is one of the most difficult challenges ever facing our country.  Across the government, a new administration poses significant changes in priorities.

The Justice Department will be tough on corporate crime and compliance.  With the exception of a failure to prosecute individuals responsible for the financial crisis in 2008, prior Democratic Administrations have a record of aggressive prosecution of white collar crime. Financial institutions, energy companies, healthcare providers, and drug and device companies will face increased regulatory scrutiny and DOJ civil and criminal enforcement.  Criminal prosecution of export controls and sanctions cases are likely to increase as well, given the importance of export and sanctions compliance to foreign policy objectives. 

A DOJ focus on COVID-19 pandemic issues will continue with an increased emphasis on health and safety violations.  COVID-19 fraud relating to the Paycheck Protection Program will be a continuing priority. False Claims Act cases will increase significantly given the federal spending increase and a heightened interest in pursuing healthcare fraud cases.

Individual criminal cases will increase as well. The Yates Memorandum was issued in 2015 during the Obama Administration. The focus on individual prosecution continued during the Trump Administration, with a continuing increase in individuals prosecuted for healthcare and FCPA violations.

In this environment, companies should redouble their efforts to implement an effective ethics and compliance program.  The Justice Department and the Treasury Department have provided extensive guidance on ethics and compliance programs.  The Justice Department’s Criminal and Antitrust Divisions issued comprehensive guidance on ethics and compliance programs.  The SEC and the DOJ issued updated FCPA compliance guidance.  The Treasury Department’s Office of Foreign Asset Control (OFAC) issued guidance for trade sanctions compliance programs.

The Justice Department is pushing companies to elevate the importance of ethics and compliance programs with an emphasis on corporate culture, risk assessments, the independence and authority of chief compliance officers, internal investigations and root cause analysis, continuous monitoring and improvements, and allocation of resources to ethics and compliance programs.

The Biden Justice Department will aggressively prosecute criminal offenses against companies and culpable individuals in high-priority areas.  To the extent that these companies have ignored the importance of ethics and compliance programs as a means to prevent and detect potential violations, DOJ will double down on the importance of ethics and compliance programs.  Slowly but surely, what is characterized as “guidance” will become a set of basic requirements for companies and individual compliance.  

Companies should respond proactively by refreshing their compliance programs, identifying priorities, and setting a timetable of action items.  DOJ and OFAC guidance establish a convenient framework for analysis and assessment.  With the continuing restrictions caused by COVID-19, companies have to conduct a flexible analysis that builds in progress in reduction of the pandemic.  While it is hard to characterize the future as a “return to normal,” the impact of COVID-19 will be felt for years and companies have to adapt to this by proactively building a nimble ethics and compliance program.

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1 Response

  1. Dear Michael, I am putting something together for President Biden reference to the wide spread of corruption & abuse. Cyber threats and role of a CISO & how it has become a money machine and for the longest time company executives have invested & paid blindly heavy salaries and invested in new toys & tools. the solutions, the toys, new promises, have not lived up to. There is malpractice & fraud and I have seen it; board seats in startups in Israel, importing unessential cheap bodies and leaving American behind. Some leaders are against Muslims some still use the N word for Black Americans and I have been an eye witness an advisor to a pharma company built a case against a black employee to position an employee or two from a company where he has a vested interest. CSOs, CISOs have started up small companies while consing up with startups specially in Israel, overlooking risk posture. American leaders in IT became leaders through the process of osmosis most of them are not corporate leaders. They have created a tsunami of check box thinkers for a cut from those certification companies. Anyway, I met President Biden as a young intern for the oil & gas industry and I have admired & respected him dearly and I am so glad he took te charge now, the timing was perfect. Under the last man corporate leaders embolden as fraud & abuse and intense disrespect for women only the selected few were privileged. there is a lot that needs to be conveyed but thank you for initiating this important topic. Aetna CSO minted money and now he is investing a new venture. He believes Muslims create problems and employers do not want to hire them while he toured around with a Muslim CIO from Lilly where Black employees get treated like second class citizen. They are others milking the Citi example for the Cyber security work done three decades old, the world of Cyber is very different now and many complain about the man who is milking a dinosaur approach. The female groups who charge thousands of dollars meeting in AZ to talk Cyber it is click group just hanger ons no values, society build on buzz words. I have this industry germinated from inception, way back in Europe where the emphasis was ethics & integrity transparency here the CIO took hold of Cyber security negligence of c suite and it was nothing but lip service & dishonesty. Thanks