arlier this month, the Department of Justice announced a new “department-wide” corporate criminal enforcement policy that it says will promote uniformity, predictability, and fairness in how it pursues corporate wrongdoing. The policy, which it labeled the Corporate Enforcement and Voluntary Self-Disclosure policy, is intended to incentivize companies to self-disclose wrongdoing and hold employees responsible in exchange for potential non-prosecution.

The core aspects of the new DOJ corporate enforcement policy (CEP) are individual accountability, voluntary self-disclosure, a standardized approach, aggravating factors, and incentives. The policy emphasizes that the corporate cooperation credit requires that all facts regarding individuals involved in the misconduct be revealed and provided. Companies that self-disclose can avoid criminal prosecution, unless the circumstances are extreme. The CEP applies to all company criminal matters handled by the department, excluding antitrust violations, and it replaces the inconsistent component-specific policies. However, aggravating factors like any involvement with senior management or pervasive misconduct may result in a declination of prosecution. Companies that self-disclose and cooperate regardless of whether they meet all the criteria may receive reductions in fines as high as 75 percent.

“This Department of Justice is committed to transparency and fairness, and our first-ever Department-wide corporate enforcement policy is yet another example of that,” said deputy attorney general Todd Blanche. “This policy draws on decades of experience across the Department and creates incentives for companies to come forward and do the right thing when misconduct occurs so that we may hold accountable the individual wrongdoers. Well-intentioned businesses know that, across the department, they will be rewarded when they self-disclose wrongdoing, cooperate with our investigations, and remediate the misconduct. But for those that do not, make no mistake — we will not hesitate to seek appropriate resolutions against companies and individuals alike that perpetrate white collar offenses that harm American interests.”

According to the DOJ, the main requirements for companies are prompt disclosure, remediation, and cooperation for the DOJ to deal with corporate crime in a consistent, transparent, and predictable environment. 

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President Trumps said he believes that by issuing such an order, he will restore American competitiveness within the international market. According to a White House press release, the Trump Administration perceives the FCPA as a “barrier to U.S. success.” “We have to save our country,” said Trump. “Every policy must be geared toward that which supports the American worker, the American family, and businesses, both large and small, and allows our country to compete with other nations on a very level playing field.”

In directing AG Bondi to pause FCPA enforcement, the White House provided multiple reasons as to why such a suspension of the law is in the best interest of the country:

• 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.
• Strategic advantages in critical minerals, deep-water ports, and other key infrastructure or assets around the world are critical to American national security.
• FCPA overenforcement infringes upon the President’s Article II authority to conduct foreign affairs, necessitating this review and new enforcement policies.
• Over time, FCPA interpretation and enforcement by U.S. prosecutors has broadened, imposing a growing cost on our Nation’s economy.
  • In 2024, the DOJ and SEC filed 26 FCPA-related enforcement actions, and at least 31 companies were under investigation by year end.
  • Over the past decade, there has been an average of 36 FCPA-related enforcement actions per year, draining resources from both American businesses and law enforcement.”

Focus Shifts to Cases Relating to Cartels and Crime

In addition to the suspension of FCPA enforcement, AG Bondi issued a memo that directed the Department of Justice’s Criminal Division’s FCPA Unit to “prioritize investigations related to foreign bribery that facilitates the criminal operations Cartels and Transnational Criminal Organizations (“TCOs”), and shift focus away from investigations and cases that do not involve such a connection.”

In helping the FCPA unit to do so, Bondi announced that she has suspended the requirement that investigations or prosecutions of cases relating to Cartels and TCOs under the FCPA be conducted by attorneys. She also indefinitely suspended a requirement that the Criminal Division of the DoJ approve such investigations and prosecutions.

Weakening the Fight Against Corruption?

President Trump’s actions did not proceed without facing criticism. According to Gary Kalman, executive director of Transparency International, Trump’s executive order “diminishes—and could pave the way for completely eliminating—the crown jewel in the U.S.’s fight against global corruption.”

Another opponent of President Trump’s actions, Alexandra Wrage, president and founder of the business anti-bribery group TRACE International said that this move shows that the president does not care about fighting corruption. “Unlike Trump, I think most U.S. companies now agree that bribery is a bad business strategy that introduces delay and uncertainty and undermines confidence in markets,” Wrage said in an email. “Trump has championed reduced regulation and has derided the FCPA, so it seems likely that fighting corruption will be a considerably lower priority.”

Advisers Urge Caution in Responding to the Move

Several law firms have cautioned companies against dismantling their FCPA compliance programs in light of the move by the Trump Administration to pause FCPA enforcement. They point out that several anti-corruption laws are still in place around the world, including the United Kingdom’s Bribery Act of 2010 and many others. They also say the move is likely to be challenged in court and could easily be reversed.

“Though the new Executive Order will likely result in fewer FCPA investigations and enforcement actions in the near term, organizations are best served by staying the course on ensuring anti‑bribery and anti-corruption compliance, including with regard to the FCPA—whose five-year statute of limitations could outlast the four-year term of the current administration—and in light of robust anti-corruption enforcement outside the United States,” wrote law firm Morrison Foerster in a client alert. “The Executive Order does not change the fact that the FCPA remains the law.”

Although President Trump’s executive order pauses all FCPA actions, its effect is not perpetual. Under the executive order, the suspension of FCPA enforcement will cease when AG Bondi issues revised FCPA enforcement guidance that promotes American competitiveness and efficient use of federal law enforcement resources. Until then past and existing FCPA actions will be reviewed in order to develop new guidelines.  

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The memo states that its purpose is to encompass programs, initiatives, or policies that discriminate, exclude, or divide individuals based on race or sex. It does not prohibit educational, cultural, or historical observances or similar events that celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion or discrimination

According to the memo, the “DoJ’s Civil Rights Division will investigate, eliminate and penalize illegal [DEI] and DEIA preferences, mandates, policies, programs and activities in the private sector and in educational institutions that receive federal funds.”

The memo additionally instructs the Civil Rights Division and Office of Legal Policy to jointly submit a report containing recommendations or enforcing federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including policies relating to DEI.

Specifically, the report should address the following:

• Key sectors of concern within the Department’s jurisdiction;
• The most egregious and discriminatory DEI and DEIA (“A” stands for accessibility) practitioners in each sector of concern
• A plan including specific steps or measures to deter the use of DEI and DEIA programs or principles that constitute illegal discrimination or preferences, including proposals for criminal investigations and for up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars; and
• Additional potential litigation activities, regulatory actions, and sub-regulatory guidance; and
• Other strategies to end illegal DEI and DEIA discrimination and preferences and to comply with all federal civil-rights laws.

AG Bondi’s memo follows President Trump’s executive order, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” that is purposed to eliminate any DEI policies within the federal government that violate anti-discrimination law as well as encourage those in the private sector to end illegal DEI discrimination and preferences.

Companies must Reexamine Their DEI Policies 

Due to the expected prioritization of anti-DEI enforcement, many companies are now reassessing their DEI programs to analyze whether its program is compliant while others continue to stand by their DEI policies.

Given the expected civil and criminal investigations, many companies such as Amtrack, Lowe’s, and Harley-Davidson announced that it would no longer allocate money and other resources to its DEI program. These companies are now examining their policies to determine whether they are legally compliant.

Although DoJ anti-DEI enforcement is  expected to increase, the DoJ’s actions pertaining to the memo will likely face legal analysis as courts have typically upheld employers’ rights to promote DEI. While the DOJ is optimistic that the Supreme Court’s decision in Students for Fair Admissions v. Harvard, which struck down affirmative action, provides a sufficient basis for issuing this memo, its validity remains to be seen.  

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lobal consulting firm McKinsey & Co. has agreed to pay $650 million to settle a Department of Justice investigation into the firm’s consulting work with opioids manufacturer Purdue Pharma. The DoJ had accused McKinsey of fueling the opioid epidemic with its aggressive sales and marketing advice to Purdue, including a 2013 engagement in which McKinsey advised on steps to “turbocharge” sales of OxyContin.

McKinsey has agreed to pay a penalty of over $231 million, a forfeiture amount of over $93 million and a payment of $2 million to the Virginia Medicaid Fraud Control Unit to resolve the criminal allegations.

The settlement marks the first time a management consulting firm has been held criminally responsible for advice resulting in the commission of a crime by a client and reflects the Justice Department’s ongoing efforts to hold those responsible for their roles in the opioid crisis to account. The resolution is also the largest civil recovery for such conduct.

“For the first time in history, the Justice Department is holding a management consulting firm and one of its senior executives criminally responsible for the sales and marketing advice it gave resulting in the commission of crime by a client,” said Attorney Christopher Kavanaugh for the Western District of Virginia. “This ground-breaking resolution demonstrates the Justice Department’s ongoing commitment to hold accountable those companies and individuals who profited from our Nation’s opioid crisis.”

McKinsey also has entered into a civil settlement agreement in which it will pay over $323 million to resolve its liability under the False Claims Act for allegedly providing advice to Purdue that caused the submission of false and fraudulent claims to federal healthcare programs for medically unnecessary prescriptions of OxyContin, as well as allegedly failing to disclose to the U.S. Food and Drug Administration conflicts of interest arising from McKinsey’s concurrent work for Purdue and the FDA. This brings the total payments under the global resolution to $650 million.

McKinsey’s Criminal Liability for Misbranding

The criminal misbranding charge was based on McKinsey’s advice to the titan opioids manufacturer. Between 2004 and 2019, McKinsey contracted with Purdue on 75 different occasions in the United States. In 2007, a Purdue affiliate pleaded guilty to misbranding OxyContin, from 1996 through 2001, by falsely marketing it as less addictive, less subject to abuse and diversion, and less likely to cause dependence and withdrawal than other pain medications, and Purdue entered into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. After the 2007 guilty plea, McKinsey partners maintained close contact with Purdue, and in 2009, worked with Purdue to enhance “brand loyalty” for OxyContin and protect market share.

In 2010 McKinsey worked with Purdue to obtain FDA approval for a version of OxyContin that was reformulated with abuse-deterrent properties. Following the introduction of reformulated OxyContin in August 2010, OxyContin sales immediately began to decline. Purdue studied the drivers for this decline and attributed it, in large part, to a drop in prescriptions for individuals abusing OxyContin and increases in regulatory safeguards intended to hinder medically unnecessary prescribing of OxyContin.

In May 2013, Purdue retained McKinsey to conduct a rapid assessment of the underlying drivers of OxyContin performance, identify key opportunities to increase near-term OxyContin revenue and develop plans to capture priority opportunities. This 2013 effort was called Evolve to Excellence, or “E2E,” and included McKinsey advising Purdue on how to “turbocharge” the sales pipeline for OxyContin by, among other strategies, intensifying marketing to High Value Prescribers, included prescribers who were writing opioid prescriptions for uses that were unsafe, ineffective, and medically unnecessary.

McKinsey consultants spoke with Purdue about the concerns and increasing reluctance of pharmacists and pharmacy chains to fill prescriptions for OxyContin as abuse of the drug rose. McKinsey consultants also went on several “ride-alongs” with Purdue sales representatives in the field, as these sales representatives called on prescribers and pharmacists. In notes about one of these ride-alongs, a McKinsey consultant wrote, in part, “Pharmacist; [had] a gun and was shaking; abuse is definitely a huge issue[.]”

In August 2013, McKinsey partners met with certain members of the Purdue Board of Directors to present McKinsey’s findings and proposal; as one McKinsey partner reported afterwards, “[b]y the end of the meeting the findings were crystal clear to everyone and they gave a ringing endorsement of ‘moving forward fast.’” McKinsey also described for Purdue the financial value at stake: “hundreds of millions, not tens of millions.”

For Purdue and McKinsey, E2E was a financial success. Their targeting of High Value Prescribers slowed OxyContin’s declining sales and kept Purdue’s profits flowing at the expense of public health. After the conclusion of McKinsey’s work for Purdue on E2E, McKinsey performed additional work with Purdue that also sought to maximize OxyContin sales by further targeting sales efforts to High Value Prescribers.

False Claims to Federal Healthcare Programs and the FDA

The department’s civil False Claims Act settlement relates to allegations that, from 2013 to 2014, McKinsey, by advising Purdue to turbocharge OxyContin marketing to High Value Prescribers as a means to increase OxyContin sales, and despite its awareness of the opioid crises, knowingly caused false and fraudulent claims for OxyContin to be submitted to Medicare, Medicaid, TRICARE, the Federal Employees Health Benefit Program and the Veterans Health Administration.

The large $650 million fine also settles allegations that, from 2014 to 2017, McKinsey knowingly misled the FDA by assigning consultants to concurrently work on both FDA projects and competitively sensitive Purdue projects, contrary to McKinsey US’ conflict of interest policy. While soliciting a contract from the FDA, McKinsey US represented to the FDA that it had a conflict-of-interest policy in which its consultants serving the FDA would not be assigned to a competitively sensitive project for a significant period of time following an assignment for FDA.

The FDA then awarded McKinsey US the first in a series of contracts on a project relating to the monitoring of the safety of FDA-regulated products. McKinsey US admitted that it did not inform the FDA that its consultants worked on the Purdue projects around the same time those consultants also worked on the FDA project.

McKinsey’s Remedial Measures

As part of the resolution, McKinsey has agreed to implement a significant compliance program, including a system of policies and procedures designed to identify and assess high-risk client engagements. As part of this compliance program, McKinsey will implement new document retention procedures and training for all partners, officers and employees who provide or implement advice to clients. This compliance program is in addition to the provisions negotiated between McKinsey and the DoJ in a concurrent resolution with McKinsey & Company Africa that was announced on December 5^th.

McKinsey has also agreed that it will not do any work related to the marketing, sale, promotion or distribution of controlled substances during the five-year term of the DPA. The settlement requires McKinsey’s Managing Partner to certify, on an annual basis, the firm’s compliance with its obligations under the DPA and federal law.  

Jacob Horowitz is a contributing editor at Compliance Chief 360°

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cKinsey and Company Africa, which operates in South Africa as a subsidiary of international consulting firm McKinsey & Co., will pay over $122 million to resolve an investigation by the Justice Department into a scheme to pay bribes to government officials in South Africa between 2012 and 2016. A former McKinsey senior partner who participated in the bribery scheme has also pleaded guilty in the case.

McKinsey Africa also entered into a three-year deferred prosecution agreement (DPA) with the department in connection with criminal information filed in the Southern District of New York charging the company with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Vikas Sagar, a former senior partner of McKinsey who worked in McKinsey Africa’s South Africa office, previously pleaded guilty to one count of conspiracy to violate the FCPA.

According to court documents and admissions, McKinsey Africa, acting through a senior partner, agreed to pay bribes to then-officials at Transnet, South Africa’s state-owned custodian of ports, rails, and pipelines, and at Eskom, South Africa’s state-owned energy company. Between at least 2012 and 2016, McKinsey Africa obtained sensitive confidential and non-public information from Transnet and Eskom regarding the award of lucrative consulting contracts and submitted proposals for multimillion-dollar consulting engagements, while knowing that South African consulting firms with which McKinsey Africa had partnered would pay a portion of their fees as bribes to officials at Transnet and Eskom. As a result of the bribery scheme, McKinsey and McKinsey Africa earned profits of approximately $85,000,000.

“McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, in a statement. “The resolution announced today — the department’s third coordinated resolution with South African authorities in only two years — is evidence that our International Corporate Anti-Bribery (ICAB) initiative, which we announced in November 2023, is bearing fruit.”

“This settlement underscores our unwavering commitment to holding companies accountable that willfully engage in corrupt activities around the world,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “This misconduct is a blatant violation of law and a breach of public trust. No matter what country the crime occurs in, the FBI will always work closely with our international partners to root out corruption.”

Details of McKinsey Africa’s Credit for Cooperation

The Justice Department has agreed to credit up to one-half of the criminal penalty against amounts McKinsey pays to authorities in South Africa in related proceedings. In addition, both McKinsey and McKinsey Africa have agreed to, among other things, continue cooperating with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of New York in any ongoing or future criminal investigation arising during the term of the DPA. McKinsey and McKinsey Africa have also agreed to enhance their compliance program where necessary and appropriate and to report to the government regarding remediation and implementation of their enhanced compliance program.

The Justice Department reached this resolution with McKinsey Africa based on a number of factors, including, among others, the nature and seriousness of the offense. McKinsey Africa received credit for its cooperation with the department’s investigation, which included:

• Immediately and proactively cooperating from the inception of the department’s investigation.
• Making numerous factual presentations to the department over the course of its investigation, derived from information obtained through the company’s internal investigation.
• Collecting, reviewing, and producing voluminous records, including those located abroad, in response to requests from the department.
• Promptly reporting the discovery of document-deletion efforts by the McKinsey partner involved in the conduct found during its internal investigation, taking additional investigative steps to uncover information and evidence regarding those efforts, and producing such information and evidence to the department.
• Reporting, in real time, newly discovered information and documents that allowed the department to preserve and obtain evidence as part of its independent investigation.
• Tracing complex internal accounting money-flows and currency exchange-information in response to requests from the department
• Preserving, collecting, and producing to the department documents located abroad, and engaging a third-party forensics consultant to analyze key electronic devices and providing to the department the results of that analysis.

McKinsey and McKinsey Africa also engaged in timely remedial measures, including:

• Putting the McKinsey partner involved in the criminal scheme on leave when it learned of the partner’s role in the scheme, subsequently separating that partner from McKinsey after discovering his deletion activity, and requiring that partner’s continued cooperation post-separation.
• Conducting additional anti-corruption training for employees in South Africa and elsewhere in Africa, and ceasing work with all state-owned enterprises (SOEs) for a period of time while it conducted its internal investigation.
• Enhancing due diligence processes for third-party partners, including instituting controls to ensure that due diligence is completed before work begins on an engagement and imposing a more rigorous risk-review for public sector clients.
• Carrying out an enhanced review process for all sole-source work that requires advance-approval before the engagement can begin.
• Voluntarily repaying, in 2018 and 2021, all revenues that McKinsey and McKinsey Africa received from potentially tainted contracts to the SOEs in South Africa from which they received contracts as a result of the criminal scheme.

In light of these considerations as well as McKinsey’s prior history, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 35 percent reduction off the fifth percentile of the otherwise applicable guidelines fine range.  

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anadian-based TD Bank will pay more than $3 billion in a historic settlement with U.S. authorities who said that the financial institution’s lax practices allowed significant money laundering over multiple years. The bank pleaded guilty to conspiracy to commit money laundering, the largest bank in U.S. history to do so, Attorney General Merrick Garland said.

“TD Bank created an environment that allowed financial crime to flourish,” Garland said. “By making its services convenient for criminals, it became one.”

TD Bank, the 10th largest bank in the United States, agreed to pay over $1.8 billion in penalties to resolve the Justice Department’s investigation into violations of the Bank Secrecy Act (BSA) and money laundering, the Justice Department said in a statement. A TD Bank statement said the full expense would exceed $3 billion for the firm, which must also upgrade its current anti-money laundering operations. It also will face a more stringent approval process for new products, stores, services and markets.

The bank pleaded guilty to conspiring to fail to maintain an anti-money laundering (AML) program that complies with the BSA, fail to file accurate Currency Transaction Reports (CTRs), and launder money.

TD Bank’s guilty pleas are part of a coordinated resolution with the Board of Governors of the Federal Reserve Board (FRB), as well as the Treasury Department’s Office of the Comptroller of the Currency (OCC) and Financial Crimes Enforcement Network (FinCEN).

“By making its services convenient for criminals, TD Bank became one,” . “Today, TD Bank also became the largest bank in U.S. history to plead guilty to Bank Secrecy Act program failures, and the first US bank in history to plead guilty to conspiracy to commit money laundering,” said Garland. “TD Bank chose profits over compliance with the law — a decision that is now costing the bank billions of dollars in penalties. Let me be clear: our investigation continues, and no individual involved in TD Bank’s illegal conduct is off limits.”

“For years, TD Bank starved its compliance program of the resources needed to obey the law. Today’s historic guilty plea, including the largest penalty ever imposed under the Bank Secrecy Act, offers an unmistakable lesson: crime doesn’t pay — and neither does flouting compliance,” said Deputy Attorney General Lisa Monaco. “Every bank compliance official in America should be reviewing today’s charges as a case study of what not to do. And every bank CEO and board member should be doing the same. Because if the business case for compliance wasn’t clear before — it should be now.”

‘Pervasive and Systemic Deficiencies’

According to court documents, between January 2014 and October 2023, TD Bank had long-term, pervasive, and systemic deficiencies in its U.S. AML policies, procedures, and controls but failed to take appropriate remedial action. Instead, senior executives at TD Bank enforced a budget mandate, referred to internally as a “flat cost paradigm,” requiring that TD Bank’s budget not increase year-over-year, despite its profits and risk profile increasing significantly over the same period. Although TD Bank maintained elements of an AML program that appeared adequate on paper, fundamental, widespread flaws in its AML program made TD Bank an “easy target” for perpetrators of financial crime.

Over the last decade, TD Bank’s federal regulators and TD Bank’s own internal audit group repeatedly identified concerns about its transaction monitoring program, a key element of an appropriate AML program necessary to properly detect and report suspicious activities. Nonetheless, from 2014 through 2022, TD Bank’s transaction monitoring program remained effectively static, and did not adapt to address known, glaring deficiencies; emerging money laundering risks; or TD Bank’s new products and services. For years, TD Bank failed to appropriately fund and staff its AML program, opting to postpone and cancel necessary AML projects prioritizing a “flat cost paradigm” and the “customer experience.”

Throughout this time, TD Bank intentionally did not automatically monitor all domestic automated clearinghouse (ACH) transactions, most check activity, and numerous other transaction types, resulting in 92% of total transaction volume going unmonitored from Jan. 1, 2018, to April 12, 2024. This amounted to approximately $18.3 trillion of transaction activity. TD Bank also added no new transaction monitoring scenarios and made no material changes to existing transaction monitoring scenarios from at least 2014 through late 2022; implemented new products and services, like Zelle, without ensuring appropriate transaction monitoring coverage; failed to meaningfully monitor transactions involving high-risk countries; instructed stores to stop filing internal unusual transaction reports on certain suspicious customers; and permitted more than $5 billion in transactional activity to occur in accounts even after the bank decided to close them.

TD Bank’s AML failures made it “convenient” for criminals, in the words of its employees. These failures enabled three money laundering networks to collectively transfer more than $670 million through TD Bank accounts between 2019 and 2023. Between January 2018 and February 2021, one money laundering network processed more than $470 million through the bank through large cash deposits into nominee accounts. The operators of this scheme provided employees gift cards worth more than $57,000 to ensure employees would continue to process their transactions. And even though the operators of this scheme were clearly depositing cash well over $10,000 in suspicious transactions, TD Bank employees did not identify the conductor of the transaction in required reports.

In a second scheme between March 2021 and March 2023, a high-risk jewelry business moved nearly $120 million through shell accounts before TD Bank reported the activity. In a third scheme, money laundering networks deposited funds in the United States and quickly withdrew those funds using ATMs in Colombia. Five TD Bank employees conspired with this network and issued dozens of ATM cards for the money launderers, ultimately conspiring in the laundering of approximately $39 million. The Justice Department has charged over two dozen individuals across these schemes, including two bank insiders. TD Bank’s plea agreement requires continued cooperation in ongoing investigations of individuals.

As part of the plea agreement, TD Bank has agreed to forfeit $452 million and pay a criminal fine of $1.4 billion, for a total financial penalty of $1.8 billion. TD Bank has also agreed to retain an independent compliance monitor for three years and to remediate and enhance its AML compliance program. TD Bank has separately reached agreements with the FRB, OCC, and FinCEN, and the Justice Department will credit $123 million of the forfeiture toward the FRB’s resolution.

Partial Cooperation Credit

The Justice Department reached its resolution with TD Bank based on a number of factors, including the nature, seriousness, and pervasiveness of the offenses, as a result of which TD Bank became the bank of choice for multiple money laundering organizations and criminal actors and processed hundreds of millions of dollars in money laundering transactions. Although TD Bank did not voluntarily disclose its wrongdoing, it received partial credit for its strong cooperation with the Department’s investigation and the ongoing remediation of its AML program. TD Bank did not receive full credit for its cooperation because it failed to timely escalate relevant AML concerns to the Department during the investigation. Accordingly, the total criminal penalty reflects a 20% reduction based on the bank’s partial cooperation and remediation.

IRS Criminal Investigation, the Federal Deposit Insurance Corporation Office of Inspector General, and Drug Enforcement Administration investigated the case. The Morristown Police Department, U.S. Attorney’s Office for the District of Puerto Rico, Homeland Security Investigations, U.S. Customs and Border Protection, and New York City Police Department provided substantial assistance.  

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The complaint alleges that TikTok and ByteDance failed to comply with the COPPA requirement to notify and obtain parental consent before collecting and using personal information from children under the age of 13.

“TikTok knowingly and repeatedly violated kids’ privacy, threatening the safety of millions of children across the country,” said FTC Chair Lina Khan. “The FTC will continue to use the full scope of its authorities to protect children online—especially as firms deploy increasingly sophisticated digital tools to surveil kids and profit from their data.”

“The Justice Department is committed to upholding parents’ ability to protect their children’s privacy,” said Principal Deputy Assistant Attorney General Brian Boynton. “This action is necessary to prevent the defendants, who are repeat offenders and operate on a massive scale, from collecting and using young children’s private information without any parental consent or control.”

ByteDance and its related companies allegedly were aware of the need to comply with the COPPA Rule and the 2019 consent order and knew about TikTok’s compliance failures that put children’s data and privacy at risk. Instead of complying, ByteDance and TikTok spent years knowingly allowing millions of children under 13 on their platform designated for users 13 years and older in violation of COPPA, according to the complaint.

As of 2020, TikTok had a policy of maintaining accounts of children that it knew were under 13 unless the child made an explicit admission of age and other rigid conditions were met, according to the complaint. TikTok employees allegedly spent an average of only five to seven seconds reviewing each account to make their determination of whether the account belonged to a child.

The company allegedly continued to collect personal data from these underage users, including data that enabled TikTok to target advertising to them—without notifying their parents and obtaining their consent as required by the COPPA Rule. Even after it reportedly changed its policy not to require an explicit admission of age, TikTok still continued to unlawfully maintain and use personal information of children, according to the complaint.

TikTok’s practices prompted its own employees to raise concerns. As alleged, after failing to delete numerous underage child accounts, one compliance employee noted, “We can get in trouble … because of COPPA.”

TikTok Allowed Children to Bypass the Age Requirement

In addition, the complaint alleges that TikTok built back doors into its platform that allowed children to bypass the age gate aimed at screening children under 13. TikTok allegedly allowed children to create accounts without having to provide their age or obtain parental consent to use TikTok by using credentials from third-party services like Google and Instagram. TikTok classified such accounts as “age unknown” accounts, which grew to millions of accounts, according to the complaint.

TikTok also allegedly made it difficult for parents to request that their child’s accounts be deleted. When parents managed to navigate the multiple steps required to submit a deletion request, TikTok often failed to comply with those requests. TikTok also imposed unnecessary and duplicative hurdles for parents seeking to have their children’s data deleted. That practice allegedly continued even after the executive responsible for child safety issues told TikTok’s then-CEO, “we already have all the info that’s needed” to delete a child’s data when a parent requests it, yet TikTok would not delete it unless the parent fills out a second, duplicative form. If the parent did not do that, the executive allegedly added, “then we have actual knowledge of underage user[s] and took no action!”

Additionally, the complaint alleges that TikTok failed to:

• Notify parents about all of the personal data they were collecting from children;
• Obtain parental consent for the collection and use of that data;
• Limit the collection, use, and disclosure of children’s personal information; and
• Delete children’s personal information when requested by parents or when it was no longer needed.

The complaint asks the court to impose civil penalties against ByteDance and TikTok and to enter a permanent injunction against them to prevent future violations of COPPA.  

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The program offers monetary awards to those provide original information relating to financial crimes, bribery or healthcare fraud. If such information results in a forfeiture greater than $1 million, the whistleblower will be entitled to a financial award granted that the whistleblower.

“With this program we’re doubling down on a proven strategy to ferret out criminal activity that might otherwise go unreported,” said Deputy Attorney General Lisa Monaco. “Law enforcement has long offered rewards to coax tipsters to report crimes — from the “Wanted” posters of the Old West to the reforms in Dodd-Frank that created whistleblower programs at the SEC and the CFTC. Those agencies alone have received thousands of tips, paid out many hundreds of millions of dollars, and disgorged billions in ill-gotten gains from corporate bad actors.”

As outlined in the program’s guidance document, there are multiple criteria to meet in order to qualify for such an award. The whistleblower’s disclosure must be voluntary, the information must be original, the submission must be truthful and complete, including everything the individual knows about the conduct at issue and the individual must cooperate with the DOJ in the investigation, including testifying as required.

Individuals that meet these requirements will be eligible for an award, calculated based on the total proceeds forfeited. Eligible whistleblowers may receive up to 30% of the net proceeds forfeited to the DoJ For the first $100 million in net proceeds. Whistleblowers are eligible to receive up to 5% of any forfeiture between $100 and $500 million. Ultimately, this system sets a maximum award at $50 million.

In determining how much to give as an award the DoJ will consider multiple factors. These factors include the significance of the information; assistance provided by the whistleblower; participation by the whistleblower in the company’s internal compliance systems; any delay or interference in reporting; and if the individual was occupying an oversight role at the company.

The Program Faces Criticism for Implementing a Maximum Award Limit

Although this system has received praise from many of its observers, some have criticized it for its award cap. “Whistleblowers take enormous risks stepping forward, particularly in reporting the kind of wrongdoing targeted by DOJ’s new program,” said Erika Kelton, a partner at whistleblower law firm Phillips & Cohen. “By limiting the amount of an award, individuals may choose to stay silent, particularly because the larger recovery may also increase the risks.”

A Justice Department official noted that the $50 million maximum payment was established considering the history of SEC whistleblower awards, where most have been $50 million or less. According to agency data, the SEC has issued only three awards exceeding $50 million since the whistleblower program’s inception in 2011.

To file a claim for a whistleblower award, an individual must file a claim form located on the DoJ’ website. In order to be considered for an award all claim forms and required attachments must be received by the Department within 90 days of its publications of the successful forfeiture.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

The post DoJ Launches New Corporate Whistleblower Program appeared first on Compliance Chief 360.

In his final ruling, Judge Amit Mehta held that as a result of suppressing competition by paying billions of dollars to operators of web browsers and phone manufacturers to be their default search engine, Google has become a monopolist and “it has acted as one to maintain its monopoly.”

Judge Mehta emphasized that Google’s illegal practices has resulted in anticompetitive behavior. The tech giant’s exclusive deals with Apple and other large mobile companies that resulted in the preloading of Google’s search engine as the exclusive and default engine displays the company’s illegal practices. These contracts drove Google’s online advertising business as it transformed its search engine into the most convenient platform to access.

“This victory against Google is an historic win for the American people,” said Attorney General Merrick Garland. “No company — no matter how large or influential — is above the law. The Justice Department will continue to vigorously enforce our antitrust laws.” “This landmark decision holds Google accountable. It paves the path for innovation for generations to come and protects access to information for all Americans,” said Assistant Attorney General Kanter. “This victory is a reflection on the tireless efforts of the dedicated public servants at the Antitrust Division and our state law enforcement partners whose work made today’s decision possible.”

In response to the final ruling as well as Attorney Garland’s statement Google’s head of global affairs Kent Walker released his own statement that that displays the company’s dissatisfaction with the ruling. “This decision recognizes that Google offers the best search engine but concludes that we shouldn’t be allowed to make it easily available,” he said in a written statement that quoted complimentary passages from Mehta’s decision. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”

What Does This Mean For the Future of Tech

Since Judge Mehta has yet to impose any penalties since Google has yet to appeal, the implication of this ruling is not completely clear. According to many, the most likely penalty imposed on Google will be a court order to terminate its existing contracts with Apple and other mobile companies. Ultimately, this case paves the way for AI-powered search engines to enter the industry and take control of what Google has to relinquish.

This case also teaches a valuable lesson to big tech companies to be cautious when drafting a contract that entails a sense of exclusivity. “If you’ve got a dominant product, you’ve got to be very careful to make sure that your licensing and contract agreements are open, because making them exclusive can be dangerous,” said University of Pennsylvania Carey Law School antitrust scholar, Herbet Hovenkamp. No longer can companies form contracts that aim to transform a product into a default platform for all users.

Although this decision will play a significant role in Google’s future business practices, it will have an even larger role for the tech industry as a whole. For now on, companies will have to be very careful when engaging in business agreements with third parties to use its products or else they will face a similar result to Google. This case is only the start of big tech antitrust lawsuits as companies such as Apple, Amazon and Meta face their own respective antitrust allegations.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

The post Google Loses Antitrust Case For Having Dominant Search Engine appeared first on Compliance Chief 360.

The company said that it expects an administrative order from the SEC to resolve previously disclosed criminal and civil investigations into “improper payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems, in connection with certain Middle East contracts since 2012.”

The company also expects to enter into the deferred agreement and False Claims Act settlement with the DoJ to resolve investigations regarding defective pricing claims for “specific legacy Raytheon Company contracts from 2011 to 2013 and in 2017.”

“The charge also includes the impact of certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company into RTX, including certain violations expected to be resolved pursuant to a consent agreement with the Department of State,” according to RTX’s financial disclosure.

It was reported in 2021 that the U.S. was investigating whether payments made by Raytheon to a consultant for the Qatar Armed Forces were actually bribes intended for a member of the ruling royal family.

“While the financial impact of these items is above what we had previously reserved, we believe the provisions we have taken put these issues behind us financially, and we will continue to cooperate with the government and external monitors as we move forward,” Neil Mitchill Jr., RTX’s chief financial officer, said on an earnings call. The company has described the bribery and contract pricing matters as legacy issues as it merged with United Technologies in 2020.

RTX said that prosecutors will seek to dismiss charges if the company adheres to the deferred prosecution agreements for a three-year period. These agreement mandates the company to enhance its compliance programs and implement other measures to prevent future violations.  

Jacob Horowitz is a contributing editor at Compliance Chief 360° 

The post RTX Sets Aside $1.2B for Anticipated Improper Payment Claims appeared first on Compliance Chief 360.