Justice Department Vows Tougher Action Against White-Collar Crime

Corporations also won’t qualify for leniency programs unless they provide information on all employees or executives believed to have participated in crimes such as fraud or bribery, Ms. Monaco said. That notice revives a policy announced during the last years of the Obama administration that was softened during the Trump administration.

Prosecutors have sought since the 2008 financial crisis to bring enforcement actions that involve more than just financial penalties. Since big companies rarely plead guilty or suffer the consequences of a criminal conviction, prosecutors rely on other forms of punishment and tools to improve future compliance.

Instead of taking companies to court, the Justice Department has come to rely on probationary settlements known as deferred prosecution agreements that require companies to admit wrongdoing, pay fines and improve how they monitor employees’ conduct. But critics have complained that many big companies, including Wall Street banks, repeatedly get the probationary treatment, showing that such outcomes don’t adequately deter wrongdoing.

Ms. Monaco, the department’s second-in-command, said prosecutors would also consider the outcome of civil regulatory investigations. That could be an important change, since the Securities and Exchange Commission is the most active enforcer against corporate malfeasance.

Around 10% to 20% of all corporate criminal settlements involved firms that previously settled allegations of wrongdoing with the Justice Department, said Ms. Monaco, who spoke at the American Bar Association’s annual white-collar crime conference.

Prosecutors are also reviewing whether companies are living up to the terms of their probationary or nonprosecution deals, Ms. Monaco said. In theory, the Justice Department could invalidate such an agreement if it believed a corporate defendant violated the settlement. That could result in prosecutors seeking an indictment or guilty plea.

The Justice Department recently informed two companies—Swedish telecom-equipment manufacturer Ericsson AB and British bank NatWest Group PLC—they had breached the terms of their deferred and nonprosecution agreements, respectively.

The DOJ’s emphasis on individual accountability has grown since the financial crisis, when no senior executives of Wall Street banks were prosecuted despite the failure or near-failure of several major investment banks and widespread problems related to the housing market and mortgage-backed securities.

In 2015, the Justice Department announced companies wouldn’t get credit for cooperating in a criminal investigation without providing specific information about the individuals involved in misconduct. That step was seen as meaningful because companies, through their own internal investigations, can shape the evidence prosecutors get. The policy was dubbed the “Yates memo,” named for Sally Yates, one of Ms. Monaco’s predecessors.

The Trump administration kept the Yates policy, but only required the disclosure of people “substantially involved” in wrongdoing. Ms. Monaco said the department would return to the approach outlined under Ms. Yates.

The Justice Department may also more often use outside monitors to verify compliance after a company settles with authorities, she said.

Such monitorships can be expensive and burdensome for companies, and their use has sometimes generated controversy. The Justice Department during the Trump administration signaled it would be more circumspect in using monitors.

“The department is free to require the imposition of independent monitors whenever it is appropriate to do so,” Ms. Monaco said.

Write to Dylan Tokar at [email protected] and Dave Michaels at [email protected]