U.S. Justice Department Outlines Metrics for New Compliance Expert

The Justice Department laid out on Monday metrics that the agency’s new compliance expert will judge companies by in criminal matters, a day before the expert begins work .

Those metrics include seven steps that the expert will use to judge a compliance program in addition to a specific road map for judging compliance at financial institutions, according to prepared remarks from Assistant Attorney General Leslie Caldwell, delivered at a compliance conference in New York.

The guidelines come a day before a compliance expert starts work at the Justice Department, Ms. Caldwell said. The Justice Department said it won’t name the person in the expert position until they begin work.

“We want to get the benefit of the expertise of someone with significant high-level compliance experience across a variety of industries,” Ms. Caldwell said. “Our goal is to have someone who can provide what I’ll call a ‘reality check.’”

Summarized from Ms. Caldwell’s remarks, the compliance expert’s metrics are as follows:

• Do directors and managers offer strong support for corporate compliance policies?
• Do compliance personnel have stature in the company? Do the compliance teams get the resources they need?
• Are compliance policies clear and in writing? Are they easily understood and translated.
• Are the compliance policies effectively communicated to employees? Are they easy to find and do employees get repeated training?
• Are the compliance policies updated?
• Are there ways to enforce the compliance policies and is compliance incentivized and violators disciplined?
• Are third parties informed of compliance expectations?

While the compliance expert will have benchmarks for accessing programs, Ms. Caldwell attempted to do away with the idea that companies will be able to avail themselves of a compliance defense to protect themselves from corporate liability.

“Some have suggested that our retention of a compliance counsel is an indication that the Department is moving toward recognizing or instituting a ‘compliance defense.’ That is not the case,” Ms. Caldwell said.

“Our hiring of a compliance counsel should be an indication to companies about just how seriously we take compliance.”

Ms. Caldwell also said it wasn’t the department’s goal to go after compliance officers.

“We’re not interested in prosecuting mistakes or accidents, or bad business judgement. And we are not looking to prosecute compliance professionals,” she said.

The summarized metrics for financial institution compliance:

• Can the financial institution identify its customers?
• Is the company complying with U.S. laws?
• Are reports of suspicious activity shared with other branches or offices?
• Do banks with a U.S. presence give U.S. senior managers a “material role” in compliance?
• Is the company candid with regulators?

Write to Stephen Dockery at stephen.dockery@wsj.com, and follow him on Twitter at @S_Dockery

http://blogs.wsj.com/riskandcompliance/2015/11/02/u-s-justice-department-outlines-metrics-for-new-compliance-expert/