The Bottom Line for Companies
- Look at compliance programs, including “know-your-customer” and third-party risk management practices, to ensure that they are addressing cartel and transnational criminal organization risks.
- Counterparty risk management processes, including due diligence, engagement, and monitoring practices, may need adjustments.
- Don’t assume DOJ will drop existing investigations that are outside these new priorities.
Attorney General Pamela Bondi’s 14 directives issued Feb. 5 signal important shifts in Department of Justice priorities that will require companies to assess their business operations and reevaluate their existing compliance programs to ensure they properly mitigate risks. Within days of the DOJ issuing its directives, on Feb. 10 the White House issued its executive order pausing Foreign Corrupt Practices Act enforcement, ordering new guidelines, and requiring AG sign-off on new matters going forward.
The directives are intended to align the DOJ with President Donald Trump’s stated policies and to lay the foundation for the DOJ to execute those under Bondi’s leadership. Issued in the form of memos to all DOJ employees, the directives cover a wide range of topics and establish a Weaponization Working Group to review law enforcement actions taken under the Biden administration for any examples of politicized actions; create a task force focused on Hamas’ Oct. 7, 2023 attack in Israel; and lift the moratorium on the federal death penalty.
The directives also announce new enforcement policies and priorities, including a reorientation of several long-standing areas of DOJ focus: foreign corruption, money laundering, asset forfeiture, and certain national security offenses. The memos direct the nation’s federal prosecutors to shift their attention to the “total elimination” of cartels and transnational criminal organizations, or TCOs. The memos also disband several kleptocracy and national security initiatives, including the Biden DOJ’s primary task force on criminal enforcement of the sanctions against Russia following its 2022 Ukraine invasion. However, they don’t impact ongoing sanctions enforcement by the US Department of the Treasury’s Office of Foreign Assets Control, including the Russia sanctions regime.
Companies involved in agriculture, manufacturing, mining, logistics, oil and supply chains may be at higher risk under the new regime, to the extent that their products are sourced from or moved through, or their facilities are located in, regions with heightened cartel and TCO activity. Likewise, financial institutions dealing with transactions involving entities located in higher-risk regions may face additional scrutiny.
Two of these recent memos, focusing on cartels and charging, pleas, and sentencing, enact some of the most significant changes in the Trump Administration’s approach and are expected to have a substantial impact on criminal enforcement.
The next chapter for FCPA enforcement remains unclear, including whether other federal agencies with FCPA enforcement authority—namely the Securities and Exchange Commission and Commodity Futures Trading Commission—will change course, and whether other state or local authorities, such as the Manhattan District Attorney’s Office, might pursue transnational bribery cases.
Foreign Corruption
The FCPA executive order directs the attorney general for 180 days to pause initiation of new FCPA investigations or enforcement actions, allowing the attorney general to make individual exceptions, as well as to “review in detail all existing FCPA investigations or enforcement actions.”
During the pause, the attorney general must develop updated guidelines that ensure “American economic competitiveness with respect to other nations” to govern all FCPA investigations and enforcement actions, and the attorney general must authorize any future FCPA matters.
The order also instructs the attorney general to consider whether any remedial measures are needed for any “inappropriate” past FCPA investigations and enforcement actions. The order omits details on the implementation of its mandates, including how far back in time the case review should extend, what qualifies as “inappropriate,” and the range of permissible remedies.
The executive order expresses the view that prohibitions on bribery undermine the competitiveness of US companies abroad. As explained in the “Fact Sheet” accompanying the order: “U.S. companies are harmed by FCPA overenforcement because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field.” Both the order and fact sheet also state that the FCPA undermines “American national security” because it thwarts companies from gaining “strategic business advantages” abroad.
The cartel memo directs the DOJ Criminal Division’s FCPA Unit to prioritize investigations and prosecutions of bribery of foreign public officials that facilitate the criminal operations of cartels and TCOs, such as bribery of foreign officials to enable human smuggling and the trafficking of narcotics and firearms. Prosecutors are instructed to shift focus away from investigations and cases that don’t involve such a connection, which could have an impact on the number of investigations and prosecutions by the FCPA Unit.
The policy’s impact could be mitigated because some companies will continue to self-disclose; the SEC and DOJ whistleblower hotlines will continue to receive FCPA tips; foreign authorities will continue to refer allegations; and, a broader set of federal prosecutors will be freed to pursue cartel and TCO-related FCPA cases with less involvement of the FCPA Unit.
The DOJ has previously brought corruption-related cases tied to TCO activity—such as the 2020 drug- and firearm-related charges brought against former president of Venezuela, Nicolás Maduro Moros, and several other Venezuelan leaders, and the 2023 drug-related conviction against former Mexican Secretary of Public Security, Genaro García Luna. Still, there is limited history of FCPA charges directly tied to this type of activity. One example is the prosecution of Ukrainian businessman Dmitry Firtash, a pending case dating back to 2013 which accuses Firtash of leading a “criminal enterprise” that allegedly bribed Indian public officials to secure mining rights in India.
In addition, the memo suspends many of the prior internal DOJ policies that required the Criminal Division to authorize an investigation or prosecution of a case under the FCPA or the Foreign Extortion Prevention Act, as well as the requirement that such cases be conducted by trial attorneys of the Fraud Section. As a result, US Attorney’s Offices will now have more discretion and flexibility to pursue FCPA and FEPA cases that have a link to cartels or TCOs, and those cases may be pursued with less oversight by the Criminal Division.
Neither the AG cartel memo nor the other DOJ memos affect the sanctions work of the US Department of the Treasury’s Office of Foreign Assets Control, which will continue to administer and enforce economic and trade sanctions, or the US Department of State’s Office of Economic Sanctions Policy and Implementation, which will continue to develop and implement foreign policy-related sanctions.
Money Laundering, Asset Forfeiture
The cartel memo also requires the DOJ Criminal Division’s Money Laundering and Asset Recovery Section to prioritize investigations, prosecutions, and asset forfeiture actions that target the activities of cartels and TCOs. Although the memo doesn’t provide examples, it appears that such cartel activities could involve the laundering of illicit proceeds, the financing of criminal operations, and the acquisition of assets derived from or used for criminal purposes.
National Security
The charging memo establishes new enforcement and resource priorities for the National Security Division. Most notably, the memo requires prosecutors to limit the use of criminal charges under the Foreign Agents Registration Act and 18 U.S.C. § 951,—which generally prohibit acting as an agent of a foreign principal without proper registration or notification—to instances of “alleged conduct similar to more traditional espionage by foreign government actors.”
The memo also calls on NSD’s Counterintelligence and Export Control Section, including the FARA Unit, to focus on civil enforcement, regulatory initiatives, and public guidance with respect to FARA and § 951, rather than pursuing criminal charges. The memo doesn’t address the prior administration’s DOJ Dec. 19, proposed rules related to FARA. That proposed rule would narrow the FARA exemption for commercial activities and make other updates that would expand the scope of activities and entities subject to FARA’s registration requirements.
The memo also disbands NSD’s Corporate Enforcement Unit, a recent initiative from the last administration that focused on corporate enforcement in export controls, sanctions, and other national security cases; and the Foreign Influence Task Force, which was established in 2017 to combat covert foreign influence operations in the US. As previously noted, none of these AG memos impacts the sanctions enforcement work of OFAC, and DOJ prosecutors can still pursue charges against operators of foreign influence campaigns outside the framework of the task force.
The charging memo’s likely impact on NSD’s corporate white-collar focus is unclear. At least with respect to FARA enforcement, the NSD had already narrowed the scope of such enforcement after a series of court rulings had limited the scope of FARA. The memo is clear that the new administration intends to forgo criminal prosecution except in instances that bear the hallmarks of traditional espionage.
Charging, Sentencing Policies
The charging memo contains extensive guidance for prosecutors to consider in charging, plea negotiations, and sentencing decisions. Notably, the memo repeatedly emphasizes the need to avoid making such decisions based on political views or affiliations. For example, the memo emphasizes that charging decisions may not be influenced “in any respect” by a subject’s “political association, activities, or beliefs.” Similarly, the memo states that there “is no room in plea bargaining for political animus or other hostility.”
Other New Policies
In addition to the memos described above, the DOJ has published two memos addressing the use of sub-regulatory guidance—guidance that did not go through notice-and-comment rulemaking—in enforcement actions and the zealous advocacy required to implement the second Trump Administration’s priorities:
Improper Guidance. This memo reinstates two memos that were issued in the first Trump Administration but later rescinded by the Biden Administration. These reinstated memos prohibit the use of sub-regulatory guidance to create rights or binding obligations on regulated entities and restrict prosecutors from bringing affirmative enforcement actions based on sub-regulatory guidance.
Zealous Advocacy. This memo mandates that DOJ attorneys “zealously” advocate for the US, which is defined to include “not only aggressively enforcing criminal and civil laws” but also “vigorously defending presidential policies and actions against legal challenges”. Should a DOJ attorney “decline to sign a brief or appear in court, refuse to advance good-faith arguments on behalf of the Administration, or otherwise delay or impede the Department’s mission” because of political views, the attorney “will be subject to discipline and potentially termination.”
Key Takeaways
These memos reflect a reorientation of the DOJ’s enforcement priorities, which could have an impact on the nature and volume of enforcement actions traditionally brought by the Criminal Division’s FCPA Unit and MLARS, the National Security Division, and possibly other components. There are also factors mitigating against any dramatic change in enforcement activity.
Regardless of whether the executive order and the new directives have a long-term impact on enforcement activity in these areas, they do contain important pronouncements. Companies should consider the following potential implications of these new policies.
Companies should take a close look at their compliance programs, including their know-your-customer and third-party risk management practices, to ensure that they are addressing cartel and TCO risks. Counterparty risk management processes, including due diligence, engagement, and monitoring practices may need adjustment to account for these policies. Some cartels and TCOs, along with their leadership, already appear on sanctions lists maintained by OFAC, which will be helpful for companies that already incorporate sanctions screening in their compliance programs.
These latest shifts in enforcement priorities aren’t a safeguard against investigation or prosecution for corruption or money laundering-related offenses. As a result, companies are cautioned against any de-investment in compliance programs or related controls in light of these latest developments.
The statute of limitations for most federal crimes is five years (six years for certain FCPA offenses, ten years for bank fraud), meaning relevant offenses that occurred in the recent past or during the current administration could be prosecuted by a subsequent administration that may take a more traditional approach to policing such crimes.
Moreover, prosecutors in the early stages of investigations frequently request—and receive—tolling agreements, or obtain court tolling orders based on requests for foreign evidence, which allow the DOJ (as well as the SEC) to bring enforcement actions for conduct that occurred much earlier in time.
While temporarily frozen, FCPA investigations that were in motion prior to Feb. 10—some known to the subjects of the investigation, and some unknown—may ultimately proceed on track following the attorney general’s review of those cases, regardless of whether they have a cartel/TCO nexus.
The DOJ’s shift in priorities doesn’t extend to other regulators, including the SEC, which has its own FCPA Unit to investigate and prosecute violations of the FCPA’s anti-bribery and internal accounting provisions, the CFTC, and various state authorities, which enforce state anti-corruption and money laundering statutes. The executive order’s discussion of the foreign affairs, economic, and national security prerogative of the president, however, suggest that civil enforcement actions by the SEC or other federal regulators may also be impacted. The DOJ’s directives may draw resources away from traditional enforcement efforts where investigations and cases in other areas are not directly tied to cartel or TCO activity. For example, the shift in priorities could function as a reallocation of the DOJ’s FCPA-focused resources, which, in contrast to the DOJ’s Narcotics-, MLARS- and Violent Crime and Racketeering Section-focused resources, historically haven’t been used to target cartel and TCO-related activity. Similarly, DOJ enforcements efforts related to kleptocracy, sanctions, and money laundering that don’t involve cartels or TCOs may diminish in the new administration. However, as we have noted, even if there is some resource reduction, that may be counterbalanced by other circumstances and developments which could help DOJ maintain its impact in these enforcement areas.
Finally, companies shouldn’t assume the DOJ will drop existing investigations following its review, nor should they assume that significant conduct not falling clearly within the newly-articulated priorities won’t be investigated.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author Information
Loretta Lynch is partner at Paul Weiss and former US Attorney General at the Department of Justice.
John Carlin is partner at Paul Weiss and former Acting Deputy Attorney General and Principal Associate Deputy Attorney General at the Department of Justice.
Mark Mendelsohn is partner at Paul Weiss and former Deputy Chief of the Fraud Section, Criminal Division, at the Department of Justice.
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