Expect Exponential Growth in DOJ Sanctions Enforcement

The temperature is rising at the Department of Justice as the Biden Administration has outlined how the department will crack down on corporate misconduct. One major step will be a "new level of intensity and commitment to sanctions enforcement," or what Deputy Attorney General Lisa Monaco calls the "new" Foreign Corrupt Practices Act.

Monaco used the growth of Foreign Corrupt Practices Act (FCPA) enforcement as an example of how a little-used statute can become the most powerful weapon in DOJ’s corporate enforcement arsenal. She expects to see the same level of exponential growth in sanctions enforcement activity.

Monaco explained the reasons for the new focus on sanctions enforcement, stating that the “geopolitical landscape is more challenging and complex than ever” and “corporate crime increasingly implicates national security."

On Nov. 30, 2022, Matthew Axelrod, Assistant Secretary for Export Enforcement at the Department of Commerce, built on Monaco’s words. Axelrod said we should expect to see overlapping enforcement activity involving export controls, sanctions and the FCPA. He warned that this would not be a short-term initiative, stating that it is “not just the flavor of the month.”

Introduced in 1977, the FCPA's purpose was to make it "unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business." The statute essentially lay dormant in the first 30 years after it was made law. 

Starting in 2007, however, enforcement began to pick up dramatically, with exponential growth in just the last few years. Since 2016 alone it has helped prosecutors settle for total sanctions of almost $22 billion. Goldman Sachs, for instance, settled for $2.6 billion in a 2020 FCPA case. French company Airbus also settled for more than $3.9 billion that same year.

This chart, derived from information from Stanford Law School's FCPA Clearinghouse, shows the sharp uptick in FCPA cases and settlement dollars in the last 15 years.

Monaco’s warning, echoed by Axelrod, that we will see enormous growth in sanctions enforcement speaks volumes. Still, companies might believe they are isolated from sanctions because they do not operate internationally. We'd warn against this. Monaco has made it clear "for any business with an international supply chain, sanctions should be at the forefront of its approach to compliance.”

To mitigate the potential of facing corporate enforcement by DOJ and other agencies, it is critically important to develop a compliance plan that has been reviewed, tested and fitted for your company.

Please reach out to Phelps' White Collar Defense and Investigations team with questions or for advice and guidance.