DOJ Announces New Whistleblower Program and Enforcement Initiatives

On March 7, 2024, DAG Monaco delivered the keynote remarks at the American Bar Association's National Institute on White Collar Crime. Her remarks centered on DOJ's enforcement priorities and the tools it will use to identify and hold accountable individual and corporate wrongdoers. First, DAG Monaco discussed DOJ's efforts to encourage companies to voluntarily self-disclose evidence of wrongdoing, emphasizing the recent uptick in self-disclosures and the resulting prosecutions of senior executives across diverse industries. Second, she unveiled a pilot whistleblower rewards program about which DOJ will provide more details in the next 90 days; this program will financially compensate individuals who report major corporate misconduct to DOJ. And third, she discussed how DOJ will apply its existing law-enforcement toolkit to emerging technologies like AI.

VSD Programs  

DAG Monaco discussed DOJ's efforts to incentivize VSD of corporate misconduct, both through a department-wide directive to U.S. attorneys' offices to develop and implement their own VSD programs, and through the implementation of DOJ's own VSD policy applicable to all U.S. attorneys' offices.  

"We've structured our Voluntary Self Disclosure programs to encourage companies to take responsibility for misconduct within their organizations. And we've conditioned benefits on the company's willingness to step up and own up—requiring it to disgorge profits, upgrade compliance systems, and cooperate in investigations of culpable employees," DAG Monaco said. 

DAG Monaco offered examples from two U.S. attorneys' offices—the Southern District of New York and the Northern District of California—of how these efforts are paying off from an enforcement perspective. Both offices are piloting what amount to VSD programs for individuals, offering non-prosecution agreements to certain categories of at-fault individuals who self-disclose wrongdoing and cooperate against other, more culpable targets. 

DAG Monaco emphasized that "no matter how good a company's cooperation, a resolution [with DOJ] will always be more favorable with voluntary self-disclosure." 

New Whistleblower Program  

DAG Monaco also announced that, in the next 90 days, DOJ will launch a pilot program that will financially reward traditional corporate whistleblowers—those not involved in any wrongdoing but who discover and report misconduct by others.  

In remarks on March 8, 2024, Acting Assistant Attorney General Nicole Argentieri specified that the pilot program will be spearheaded by DOJ's Criminal Division—especially the Money Laundering and Asset Recovery Section ("MLARS"), given that the Department's statutory authority is tied to the Department's forfeiture program. See 28 U.S.C. § 524(c)(1)(C) (authorizing the attorney general to pay awards from "information or assistance leading to civil or criminal forfeitures"). MLARS will work closely with U.S. attorneys, the FBI, and other DOJ offices to develop program guidelines that will address eligibility requirements for potential whistleblowers.  

The new whistleblower program will fill gaps in what DAG Monaco described as a patchwork of already existing programs, including at the Securities and Exchange Commission ("SEC"), the Commodity Futures Trading Commission ("CFTC"), the Internal Revenue Service, and FinCEN—all of which have been successful, but limited in scope, given the agencies' jurisdictions. Additionally, while qui tam actions provide whistleblowing incentives, those are available only for fraud against the government. By contrast, the new program seeks to address the full range of corporate and financial misconduct that the Department prosecutes by providing financial incentives where no such incentives currently exist.  

Under the new program, individuals who help DOJ discover significant corporate or financial misconduct could qualify to receive a portion of the resulting forfeiture. Payments will be offered under the following limited circumstances:  

• Only after all victims have been properly compensated;
• Only to those who submit truthful information not already known to the government (i.e., the whistleblower must be "first in the door");
• Only to those not involved in the criminal activity itself; and
• Only in cases where there is not an existing financial disclosure incentive—including qui tam or another federal whistleblower program. 

Like the SEC and CFTC programs, which limit rewards to cases where the agency orders sanctions of $1 million or more, DOJ is considering establishing a monetary threshold as a way of focusing resources on the most significant cases. 

While DOJ always accepts information about violations of federal law, the Department is especially interested in information about criminal activity in the U.S. financial system and both foreign and domestic corruption cases. 

"Used proactively, this program … will create new incentives for individuals to report misconduct to the department. And it will drive companies to invest further in their own internal compliance and reporting systems," DAG Monaco said.

Corporate Compliance and AI 

AI is an enormously powerful technology that holds great potential for corporations, but also creates potential peril, if the government believes it is being used to commit corporate crimes. DAG Monaco discussed how DOJ has taken note, promising to use an old tool—sentencing enhancements—against misuse of the new, disruptive technology. Now, similar to the use of firearms in the commission of a crime, DOJ will seek harsher penalties against individual and corporate defendants using AI to commit white-collar crime to account for the serious risks the technology poses to the public. 

To further combat misuse of AI, prosecutors assessing a company's compliance program during corporate resolutions will now scrutinize the company's ability to manage AI-related risks. DAG Monaco has directed the Criminal Division to incorporate assessment of disruptive technology risks—including risks associated with AI—into its guidance on Evaluation of Corporate Compliance Programs.

This Commentary was reprinted by the Harvard Law School Forum on Corporate Governance blog on April 3, 2024.