The DOJ Announces New Whistleblower Program. This month, March of 2024, Deputy Attorney General (“DAG”) Lisa Monaco discussed updates to the Department of Justice’s (“DOJ” or “Department”) corporate criminal enforcement policies and announced a pilot program that will financially reward whistleblowers unveiling major corporate misconduct.
The policies and priorities discussed reaffirm DOJ’s “carrot and stick” approach to encouraging companies to self-disclose criminal misconduct and cooperate with the Department’s efforts to prosecute individual wrongdoers. The new whistleblower reward program, which is expected to take shape over the next 90 days, provides stronger incentives for tipsters to disclose corporate and financial misconduct. Further, DOJ has adopted an aggressive stance toward seeking enhanced penalties for corporate misuse of new and disruptive technologies like artificial intelligence (“AI”).
DOJ continues to emphasize aggressive enforcement of white-collar crime against entities and individuals and remains committed to incentivizing voluntary self-disclosure (“VSD”) by corporations. And increasingly, the Department is incentivizing individuals to expose wrongdoing by providing non-culpable whistleblowers with financial incentives through the impending DOJ whistleblower program. Given the special scrutiny the Department will apply to the use of technologies like AI, companies should consider updating their compliance programs to mitigate risks related to the misuse of AI.
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.
(source: Harvard Law School: https://corpgov.law.harvard.edu/2024/04/03/doj-announces-new-whistleblower-program-and-enforcement-initiatives/)