2022 FCPA Predictions
This was a strange year. Not just because of the continuing pandemic and economic disruption. The Biden Administration took over after an unusual and delayed transition. The apparatus of government was slow to transition. Compounding this disruption, the government had to maintain a singular focus on the pandemic. As a result, the wheels of government moved in strange ways, often with delays.
The Biden Administration’s appointment of Merrick Garland as the Attorney General was expected to result in aggressive enforcement, including white collar and FCPA cases. Political appointees have made numerous public statements warning companies and executives of new, aggressive enforcement programs. The SEC, CFPB, CFTC, Treasury Department, FTC and other regulatory agencies were expected to ramp up regulatory enforcement.
In the end, however, the words have not been matched by any action. FCPA enforcement was at the lowest level since 2015. Annual penalties totaled around $500 million, depending on how you count “FCPA enforcement actions.” DOJ closed the year by only settling three corporate enforcement actions;; the SEC brought four – including a separate enforcement action against WPP. The four cases included Deutsche Bank, Foster Wheeler, Credit Suisse, and WPP. DOJ’s prosecution of individuals for FCPA violations continued at a significant clip, totaling 26 new cases, Many, including myself, though DOJ would have brought at ;least 40 individual FCPA and related-charges cases against individuals.
Notwithstanding this slow year in FCPA enforcement, the signs still point to a significant increase in FCPA enforcement in 2022. Companies continue to disclose ongoing FCPA investigations. DOJ has increased the number of FCPA prosecutors and FBI investigators, and even co-locating an FBI squad with prosecutors at DOJ’s offices. The pieces are in place and the Administration’s commitment is likely to play out in a big way.
Adding to the mix, the Biden Administration announced a new national anti-corruption strategy – Strategy to Counter Corruption. This new strategy followed the Biden Administration’s decision to elevate the global battle against corruption as a national security priority. The initiative encompasses a wide-range of initiatives, including new beneficial ownership disclosure obligations, aggressive use of AML laws against gatekeepers (e.g. lawyers, accountants), proposed amendment to the FCPA to punish bribe takers, and increased anti-corruption compliance expectations.
At the close of this year, DOJ announced revised white collar enforcement policies and priorities. As part of this initiative, DOJ stated it would avoid deferred or non-prosecution agreements for repeat corporate offenders, increase the appointment of corporate compliance matters in more cases, and consider corporate criminal and regulatory enforcement records when resolving corporate enforcement cases. This new approach was reflected in the enforcement action against NatWest (formerly Royal Bank of Scotland) that included appointment of an independent compliance monitor and a requirement that NatWest plead guilty to a two-count information.
The Volkov Law/FCPA crystal ball reveals that DOJ and the SEC are likely to increase FCPA enforcement, and potentially exceed prior years of aggressive enforcement. FCPA cases are in the pipeline and ready to move; DOJ’s commitment to act has been repeated and would be consistent with its recent national strategy to counter corruption. Here is our list of specific predictions.
- DOJ is likely to exceed: (a) 20 FCPA corporate enforcement actions; (b) 30 individual criminal indictments; and (c) total monetary penalties of over $3 or $4 billion.
- The SEC will match the number of corporate enforcement actions. Individual enforcement cases should increase beyond the single case the SEC brought last year.
- Global anti-corruption enforcement is rapidly evolving through cooperation and coordination among prosecutors and law enforcement. Information sharing is increasing and detection risks are high for foreign bribery schemes in certain countries. Foreign anti-corruption agencies in Brazil, France and the United Kingdom are serious players in the enforcement world, and more countries are adopting new prosecution initiatives.
- DOJ and SEC anti-corruption compliance expectations are increasing. Companies that ignore DOJ and SEC FCPA Guidance and investment in effective ethics and compliance programs can expect a cool reception from prosecutors. In particular, companies cannot claim that the “cost” of compliance programs was too high to implement an “effective” anti-corruption ethics and compliance program.
- Prosecutors continue to review the authority and independence of compliance officers. A CCO has to have the resources needed to execute an effective ethics and compliance program. Further, a CCO has to have adequate authority and responsibility for controls to exercise appropriate discretion over potential violations of law and corporate policies. Companies that fail to create an effective environment for CCOs to work risk enforcement and increased penalties.
All in all, buckle up because 2022 will be a big year for DOJ and SEC FCPA enforcement.