Corporate Compliance Programs - Guidance on their Evaluation

03.03.2017

In February 2017, the U.S. Department of Justice (DoJ) published a paper providing guidance on the “Evaluation of Corporate Compliance Programs” . The guidance aim at giving insights into the criteria the Fraud Section of the DoJ typically uses to assess the effectiveness of corporate compliance programs. Hence, the paper may assist corporations when assessing the own compliance program and identify risks or areas of improvement. The DoJ emphasizes, however, that each case requires an individual assessment and, therefore, the criteria listed in the paper are not intended to be a “check list” or a “formula”.

The guidance on the “Evaluation of Corporate Compliance Programs” lists eleven sample topics and questions which are of particular relevance when analyzing whether a corporation has an effective compliance program and what remedial efforts are made to implement or improve a compliance program. For instance, the guidance addresses whether there is a root cause analysis for misconduct and whether there were any opportunities to detect misconduct at a prior occasion. Another aspect are effective reporting mechanism and the response to investigations such as the way a company uses investigations and how it responds to the findings of an investigation. Furthermore, evolving updates to company policies, procedures and practices are listed as one example of the requirement of a continuous improvement, periodic testing and review of a compliance program.

The guidance also refer to particularly sensitive fields such as mergers and acquisitions where there should be a particular emphasis on the due diligence process and an integration of compliance functions in the merger, acquisition and integration process. This would give rise to questions such as whether there has been a process for tracking and remediating misconduct or risks that were identified during the due diligence phase, including a process for implementing compliance policies and procedures at new entities.

Investigations of the DoJ become relevant for non-U.S. corporations through the broad reach of the Foreign Corrupt Practices Act (FCPA) which was enacted in 1977. The “Resource Guide to the U.S. Foreign Corrupt Practices Act” published by the DoJ and the U.S. Securities and Exchange Commission in 2002 provides, amongst other publications, an in-troduction to the application of the FCPA which focuses primarily on antibribery.

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Any further questions? Please contact: Dr. Anke Meier or Dr. Ingo Theusinger 
Practice Group: Litigation, Arbitration & ADR, Compliance & Investigations