Everyone is talking about AI, even the criminal justice department

In addition to formally discussing how the criminal justice department will address companies’ use of AI, Argentieri sketched other changes in the division “Evaluation of Corporate Compliance Programs” guidelines, the second update in about 18 months.

“Just as we expect companies to continually review and update their policies, compliance “To address emerging risk factors, we regularly evaluate our policies and enforcement tools, including the ECCP, to account for changing circumstances and emerging risks,” said Argentieri, who was not present at the Dallas-area event but spoke live via video conference.

According to the ECCP update, prosecutors will assess:

• The technology a company and its employees use to do business
• Whether the company has carried out a risk assessment regarding the use of the technology
• Whether the company has taken appropriate measures to mitigate the risks associated with the use of the technology

She gave an example of prosecutors questioning whether a company has made itself vulnerable to schemes enabled by emerging technologies, including false approvals and documentation, which can be generated at scale using KIAnd, more importantly, whether companies test technology to make sure it does what it is intended to do.

“We will consider whether there are compliance controls and tools in place to identify and mitigate those risks, such as tools to confirm the accuracy or reliability of the data used by the company,” Argentieri said.

She also stressed the importance of a culture where everyone can speak up and warned that advanced data capabilities are not just for the finance function.

“We have added questions about whether compliance personnel have sufficient access to relevant data sources and the assets, resources and technology available to compliance and risk management personnel,” Argentieri said. “As part of this assessment, we will also consider whether companies are deploying the same resources and technology to collect and leverage data for compliance purposes that they use in their business.”

In other words, an inequality in resource allocation can distract from the Ministry of Justicesaid Daniel Kahn, partner at Davis Polk, during a session the day after the ECCP updates were announced.

“What they’re saying now is if you’re a company using artificial intelligence, we want to understand when there’s a disparity in the resources that are being given to the company versus the compliance.”

Pilot Program Updates

Argentieri also provided updates on two ongoing U.S. Department of Justice initiatives involving whistleblower recovery and incentives. She encouraged companies to learn from their own past misconduct and from problems at other companies.

Refunds and incentives

Since the launch of the three-year clawback and incentive pilot program, the Criminal Division has included in nine corporate resolutions a requirement that companies provide clear metrics “to reward compliance-promoting behavior and deter misconduct.” That language was included in a few resolutions before the pilot program, which is now about halfway through, but is now mandatory in every resolution that reaches the division.

According to Argentieri, this is changing corporate policies and procedures in America.

“Early indications are that these innovations are changing company behavior,” she said. “For example, one company that had an agreement with the Criminal Division required that compliance standards be taken into account and that misconduct be reported in annual reviews. As a result of these efforts and a company-wide messaging campaign, the company is seeing more reports of potential compliance issues.”

In addition to requiring companies to detail their compensation structures, the pilot programme also aims to encourage companies to claw back or withhold compensation in the event of misconduct, by offering drastic reductions in fines.

Both Albemarle and SAP were able to secure penalty reductions under the pilot program, which charged both companies with violating the Foreign Corrupt Practices Act (FCPA). Albemarle’s 45% reduction from the low end of the applicable penalty range is the largest percentage reduction to date, Argentieri said.

Whistleblower Awards

Since the Justice Department launched its own whistleblower pilot program in early August, it has received tips from more than 100 people, Argentieri said.

The department’s program was designed to fill gaps in whistleblower programs at other federal agencies. It covers four areas of white-collar crime enforcement not covered by other programs: abuse of the financial system by institutions or insiders, foreign corruption and bribery schemes, domestic corruption, and health care schemes that target private insurers.

Whistleblowers are encouraged to not only contact the department, but also use internal channels.

“A whistleblower who reports internally to their company is eligible for an award if they report it to the department within 120 days of their internal report,” Argentieri said. “More importantly, filing an internal report before reporting it to the department is a factor that will increase the size of a potential whistleblower award.”

The whistleblower pilot program is not only a boon for individuals, but also for companies, who can earn bonus points, even to the point of suspicion of rejection, by timely reporting and remediating misconduct reported by an internal whistleblower.

‘A chair at the table’

In her address to the assembled group of compliance, risk management and governance professionals, Argentieri repeatedly emphasized the impact such individuals can have on the fate of companies that may face criminal charges brought by the Department of Justice.

With the recent updates to the ECCP — and even the existence of the ECCP in general — the Department of Justice has regularly elevated the compliance profession and reinforced its importance beyond business units, said Joe Valenti, partner at Saul Ewing.

“When a compliance failure occurs at a company that has gone to great lengths to invest in best-in-class business development technology but has cut back dramatically on compliance staff, software, training and auditing, it appears likely that the DOJ will dismiss that compliance program as classic window dressing rather than reduce penalties.”

Indeed, Argentieri pointed to positive examples of doing the right thing (or making good faith efforts to do so), including SAP, Albemarle and Boston Consulting Group (BCG), which received a Justice Department recusal in August over its conduct in Angola despite clear evidence of bribery. Timely disclosure and full cooperation were critical to the department’s resolution in the BCG case, Argentieri said.

However, not all remedial measures are equal. At the other end of the spectrum, Argentieri criticized Trafigura, which received a 10% discount for its cooperation and remedial measures. According to Argentieri, this was related to the failure to preserve and provide evidence in a timely manner. Trafigura was also criticized for its conduct during the negotiations for a solution and its inconsistent remedial measures.

In any case, business leaders (not just compliance officers) would be wise to keep a close eye on the Justice Department’s resolutions, she said.

“With our resolutions, we want to highlight what a company has done, or failed to do, to get more or less credit for cooperation and recovery,” Argentieri said. “We do that to provide transparency and guidance to other companies, and to make it clear that we give the greatest benefits to companies that act with urgency and really go above and beyond what is expected.”

Argentieri says it’s critical that compliance has a seat at the table. And when companies discover misconduct, whether directly through the compliance program or not, it’s best to “call us before we call you.”