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Banking & Finance Advisory: Justice Department: Individual Accountability for Financial Institution Misdeeds

Category: Banking & Finance Published: Sunday, 10 April 2016 Written by Chance Allen

Last September, the Justice Department amended the United States Attorneys Manual (USAM), the manual that provides guidance for the Department of Justice Attorneys. The amendments are designed to ensure that individual accountability is at the heart of the Justice Departments enforcement strategy. In an address to the American Bar Association Money Laundering Conference, Deputy Attorney General Sally Quillian Yates said:

In announcing the policy, we emphasized the importance of holding accountable the individuals who commit corporate wrongs for reasons that are fairly obvious crime is a crime and lawbreakers must be held responsible regardless of whether they violate the law on the street corner or in the corner office. We know that in the white-collar context, one of the most effective ways to ensure accountability and to deter future misconduct is in pursuing not just corporate entities, but also the individuals through which these corporations act.

Historically, prosecutors were interested in holding banks and other organizations responsible for wrongdoing expressed through fines or restrictions placed on future operations. With the amendment to the USAM, the focus is to establish personal responsibility for corporate misdeeds. As explained by Ms. Yates, if a company wants credit for cooperating any credit at all it must provide all non-privileged information about individual wrongdoing. Companies seeking the cooperation credit are expected to do investigations that are timely, appropriately thorough and independent and to report to the government all relevant facts about all individuals involved, no matter where they fall in the corporate hierarchy. (Emphasis supplied.)

The amendments to the USAM will not impact financial institutions that are in compliance with applicable laws and regulations. But when there are violations and the Justice Department is involved, the Department will seek to hold the individuals involved accountable. No longer will senior officers be able to escape liability or accountability by paying a corporate fine or discharging a junior officer. The policy amendments may make the job of a compliance officer more difficult and create greater tension between compliance officers and senior management.

A copy of Ms. Yates remarks may be obtained at:

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