Deferred Prosecution deals under scrutiny


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In a move that could raise the stakes of effective BSA/AML Compliance even higher, federal judges are claiming authority to deny Deferred Prosecution Agreements (DPAs) that they believe are too lenient. Currently, DPAs are a popular tool in the Justice Department’s arsenal to punish corporate offenders—yet leave the offenders without a criminal conviction.

Most DPAs require the admission of guilt, the payment of fines, and a probationary period monitoring adherence to improved operations and behaviors in areas like BSA/AML Compliance, adherence to sanctions requirements, and so on depending on the nature of the enterprise. In return, corporate offenders avoid criminal prosecution.

According to the Wall Street Journal, a federal district judge in February overturned a DPA offered to a Dutch aerospace firm that violated sanctions by doing extensive business in Iran and other sanctioned nations. An appeal of that judge’s rejection of the DPA is now being heard by the U.S. Court of Appeals. The Justice Department asserts in the appeal that federal judges are overstepping by interfering in their settlement negotiations with corporate offenders.

In the Dutch aerospace case, U.S. District Judge Richard Leon wrote in his opinion that the Justice Department concessions were too lenient given the nature of the violations. He also expressed concern that no executives had been charged even though they had assertively pursued sanctions violations in order to garner company profits. The Justice Department justified its DPA arrangement with the Dutch firm  partly due to the fact that the firm itself brought the violations to the attention of the Department.

If federal judges do in fact take a more active role in evaluating the compensatory quality of the DPAs, corporate offenders may find non-prosecution avenues such as fines and probationary periods more difficult to secure.

What do you think? If the Justice Department loses this appeal of its autonomy in offering DPAs, will this kind of judicial scrutiny filter down to more internal attention to BSA/AML Compliance for U.S. banks and other financial institutions? It seems likely, especially if more criminal prosecutions of corporations and executives were the result.


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