DOJ’s New CEP Proposes Guaranteed Declination for Some Self-Reporters

(Breaking news; last updated at 8:55 a.m. ET May 14)

The DOJ has moved to further formalize the Trump Administration’s pivot on corporate crime, revising the Criminal Division’s corporate enforcement policy (CEP), restricting monitorships and outlining clearer paths for companies to avoid prosecution.

Revised policies establish three distinct resolution paths, with companies that voluntarily self-disclose misconduct receiving a guaranteed declination rather than just a presumption if they meet certain other qualifications, while simultaneously repositioning the DOJ’s whistleblower program to prioritize tips on tariff fraud, violations of immigration law and cases involving cartels and terrorist organizations. The focus on cartels and terrorism reflect changes made earlier this year, when Attorney General Pam Bondi issued orders pausing FCPA enforcement and redirecting resources toward combating cartels and transnational criminal organizations (TCOs).

Speaking at a May 12 conference on financial crimes and AML, Matthew R. Galeotti, head of the DOJ’s Criminal Division, said the changes were designed to eliminate burdensome investigations that hamper American business and economic growth. 

“Excessive enforcement and unfocused corporate investigations stymie innovation, limits prosperity and reduces efficiency,” Galeotti said. “So that ends today.”

The DOJ’s changes, as announced by Galeotti, aren’t necessarily ground-quaking, said Justin Danilewitz, chair of Saul Ewing’s white collar and government enforcement practice, but they do signal a more business-friendly environment.

“[C]hanges in policy emphasis and focus matter, even if on the margins,” Danilewitz said. “When Mr. Galeotti talks about the burdens and costs to companies from government investigations, it reflects a degree of concern for corporate America that is new and different. Businesses will feel more comfortable about making voluntary self-disclosures if they are convinced they have a fair-minded adversary who understands business realities and challenges and is willing to reach resolutions that reflect those realities.

CEP changes

Perhaps the most consequential changes come in the revised corporate enforcement and voluntary self-disclosure policy, which outlines resolution paths for companies facing potential criminal prosecution.

Under the new policy, companies can earn a declination — not just a presumption of one — under a series of circumstances, highlighted in a flow chart (seen above). They must:

• Self-report
• Meet all voluntary self-disclosure requirements (self-reporting to the Criminal Division or, with good reason, another DOJ section; report conduct previously unknown to the DOJ; have no pre-existing obligation to disclose; make disclosure prior to imminent threat that DOJ would learn of misconduct; and make a reasonably prompt disclosure)
• Fully cooperate
• Timely and appropriately remediate
• Lack aggravating circumstances

“Companies that meet our core requirements … will not be required to enter into a criminal resolution,” Galeotti said. “This is a clear path to declination.”

The new CEP also creates a middle ground for companies that self-report in good faith but don’t meet all other voluntary self-disclosure requirements. In these “near-miss” cases, companies can still receive substantial benefits: a non-prosecution agreement with a term under three years, no corporate monitor and a 75% reduction of the low end of sentencing guidelines. In cases where companies aren’t eligible for other resolutions, prosecutors retain discretion but are limited to recommended fine reductions of at most 50%.

Notably, the policy now stipulates that corporate resolution terms should not exceed three years except in “exceedingly rare cases,” and prosecutors are directed to review existing agreements for potential early termination. 

The DOJ’s push toward self-reporting in the form of a possibly guaranteed declination may not turn many heads inside corporate America, but the addition of a path toward non-prosecution for companies that don’t fit the parameters of the guarantee could have a bigger impact, said Gina Castellano, a partner in Cadwalader’s compliance, investigations and enforcement practice.

“[It] remains that a company cannot have certainty that a self-disclosure will qualify under the department’s definition, which requires that the misconduct not be known to the department prior to the self-disclosure and that the department deem the self-disclosure ‘reasonably prompt,’ neither of which is within a company’s control,” she said. “It’s hard to see that the revised CEP’s attempt to offer the guarantee of a declination, where that guarantee is conditional on factors outside of the company’s control, will really move the needle for a company when deciding whether to self-disclose. That said, the revised CEP’s ‘near-miss’ category — which offers a non-prosecution agreement and no monitor if a company discloses but does not meet the department’s definition of voluntary self-disclosure or has aggravating factors — is a significant carrot that will undoubtedly factor into a self-disclosure analysis, especially where the conduct is more egregious.”

Monitorships

In the months since Donald Trump was inaugurated, the DOJ has moved to end several corporate monitorships ahead of schedule. Monitorships have been halted early for Glencore and Albemarle, and Galeotti’s announcements suggest the DOJ under Trump and Bondi won’t often mandate corporate monitors.

“Without appropriate oversight from the Criminal Division, monitors can create an adversarial relationship with the companies they monitor, impose significant expense, stray from their core mission and unduly interfere with business,” Galeotti said in his speech. “At times, the money companies spend on their monitor could be better spent investing in their compliance programs or, if they haven’t already, making victims whole.”

The DOJ’s new corporate monitor selection policy introduces limitations on when prosecutors can impose monitors and lays out four factors prosecutors must consider before imposing a monitor: the risk of criminal conduct recurring that impacts US interests; the availability of other independent government oversight; the efficacy of the company’s compliance program; and the maturity of the company’s controls and ability to test its compliance program.

When monitors are imposed, the new policy also mandates cost controls, including fee caps, budget approvals for all work plans and required biannual meetings among the DOJ, monitor and company.

DOJ whistleblower program

The DOJ will also change tack with its whistleblower program to ensure it aligns with the Trump Administration’s chosen enforcement priorities. Launched last fall under the Biden Administration to offer potential million-dollar payouts to tipsters with information on financial fraud and bribery, the program instead will focus on immigration enforcement, cartels and national security, among other areas, reflecting broader Trump Administration policy.

As with the original program, tips must result in forfeiture to be eligible for an award. 

“Today, we have added the following priority areas for tips: procurement and federal program fraud; trade, tariff and customs fraud; violations of federal immigration law; and violations involving sanctions, material support of foreign terrorist organizations or those that facilitate cartels and TCOs, including money laundering, narcotics and Controlled Substances Act violations,” Galeotti said.

The changes to the whistleblower program come amid a broader departmental shift in focus. According to Reuters reporting, the FBI has directed agents to scale back white-collar crime investigations and devote approximately one-third of their time to immigration enforcement efforts.