RANE Expert A.J. Bosco on Recent Compliance Guidelines from the DOJ and OFAC
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A.J. Bosco, experienced attorney and compliance expert.
Recently, the Department of Justice and the Office of the Treasury both released guidance on compliance (The Evaluation of Corporate Compliance Programs and A Framework for OFAC Compliance Commitments, respectively). We spoke with experienced attorney and RANE compliance expert A.J. Bosco to hear his thoughts on the recent publications.
The updated DOJ guidance, released unexpectedly on April 30, was intended to help prosecutors in the context of a criminal investigation, but gives anyone in business, legal, and compliance communities a clearer idea of what expectations the government has of compliance programs.
- The unanticipated publication raised questions about why, and why now? Mr. Bosco says he believes that the DOJ has been operating under the expectation that when they make investigations public, they are giving the industry a roadmap to follow. But he cautions that many businesses - left largely to interpret the smoke signals on their own – have assumed that just following the explicitly-stated rules to the letter was sufficient.
- However, the DOJ has more harshly penalized organizations that appear not to have followed that roadmap, even if they have technically followed the rules. Mr. Bosco advises companies to take into consideration how their peers have been prosecuted, and to make appropriate changes to reflect that.
The greater detail and clarity of the updated guidance follows other recent actions on the part of the DOJ to increase visibility into its operations.
- In March, Assistant Attorney General Brian A. Benczkowski delivered a speech in which he promised greater transparency surrounding the DOJ’s enforcement practices to convey incentives for responsible corporate behavior, and the Justice Department released all of its case declinations in order to provide greater visibility into the decision-making process to help companies make informed choices.
- The augmented guidance document seems in-line with this approach.
Mr. Bosco has recently seen an increase in activity by the DOJ on the white-collar front. He notes that it is hard to determine if this is a trend or a bubble, as it could be the culmination of investigations that have been in the pipeline or due to violations brought to the DOJ’s attention that are just too flagrant to ignore.
Days after the DOJ’s release, on May 2, the Treasury released A Framework for OFAC Compliance Commitments, which outlines the essential components of an effective Sanctions Compliance Program (SCP). The publication is the first time OFAC has given companies explicit guidance on what it considers to be necessary inclusions for an effective SCP.
- Like the DOJ’s guidance, it proffers clear standards and examples against which organizations are able to benchmark their compliance programs and efforts.
- Mr. Bosco says that something he found of particular note in the OFAC framework was the necessity of commitment by senior management. OFAC considers senior management’s commitment to a company’s SCP as one of the most important factors in determining its success. The DOJ’s guidance also states that an effective compliance program requires a high-level commitment by company leadership (both executive and middle management) to implement a culture of compliance.
- Given the specificity regarding governance and executive standard-setting, Mr. Bosco infers that a culture of compliance is and will be a point of focus for the regulators, but he also cautions that this is the most nebulous concept to pin down and the most difficult to implement.
- Mr. Bosco warns that without setting the appropriate tone-from-the-middle, it will be exceedingly difficult to change the culture of the company. All levels of management, from executive to middle, need to treat the compliance department as a valued and equal partner. If the tone is set that compliance professionals don’t have a seat at the table, it will be near impossible for any other employee to take them seriously.
Speaking to companies who may have to prove they have done all they could to build a culture of compliance, Mr. Bosco stresses the necessity of a good governance system, even from smaller or startup companies with limited resources. He says that the smartest companies are dedicating funding – from the start – for setting up compliance programs.
