Among the “biting” new sanctions will be a wider ban on the provision of European services to Russia. The list of banned services has not yet been announced, but there are multiple reports circulating that this may include legal services. Watch this space!
On September 16, 2022, the U.S. Department of Justice (“DoJ”) issued a report on The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets (the “Report”), which will have a significant and wide-ranging impact on the U.S. government’s ability to investigate, prosecute, and disrupt crimes involving digital assets. The Report announces an expansion of DoJ’s enforcement capabilities through the establishment of a national network of prosecutors dedicated to investigating and prosecuting criminal activity involving digital assets. The Report also provides recommended regulatory and legislative actions, in order of priority, which DoJ believes would help it enforce criminal violations involving digital assets.
On September 15, 2022, Deputy Attorney General Lisa Monaco announced updated guidelines for the U.S. Department of Justice’s (“DOJ”) corporate criminal enforcement in a speech at New York University Law School. Monaco previously announced in October 2021 that DOJ would take a tougher stance on white collar crime. Shortly thereafter, Monaco formed an advisory group to evaluate potential changes to existing DOJ policies to facilitate DOJ’s more aggressive approach. The advisory group solicited feedback from defense counsel, executives, compliance personnel, law professors, and others during its review. Last week’s announcement and a DOJ memo released the same day were the culmination of nearly a year’s work and included both incentives and warnings for businesses and individuals. The new guidance updates existing DOJ guidance in the following areas:
Individual Accountability
Expedited Investigations and Prosecutions
Prior Misconduct
Department-Wide Incentives for Voluntary Disclosure
New Guidelines for Compliance Monitors
New Guidance for Assessing Corporate Compliance Programs
The policy revisions apply across the DOJ, and while some of the announcements supplement or clarify existing guidance, others establish new policies, e.g., guidance on evaluating a corporation’s compensation plans. DOJ indicates that the new guidance will be incorporated into DOJ’s existing, publicly available policy manual, the “Justice Manual,” but that for now, prosecutors are instructed to employ the Justice Manual’s existing “Principles of Federal Prosecution of Business Organizations,” in conjunction with the October 2021 and these recently announced policy updates.
The author and editors would like to thank Eben Kurtz for his contributions to this post.
On 21 April 2022, the U.K.’s Financial Conduct Authority (“FCA”) secured its first Account Forfeiture Order (“AFO”), a tool used for asset recovery under Part 5 of Proceeds of Crime Act 2002 (”POCA”), for a sum of £2,000,000 against the company QPay Europe Limited. Please find the FCA’s press release on the case here.
Until now, these powers, granted by the Criminal Finances Act 2017, have mainly been used by the National Crime Agency, regional police forces, and His Majesty’s Revenue and Customs (“HMRC”). However, because the FCA stated in their recently published three year strategy that they plan to use their “enforcement and intervention powers more actively”, these measures should now be firmly on the radar of the compliance teams and MLRO’s of FCA regulated entities.
The U.S. Department of Justice announced late last year that it would utilize the False Claims Act, the U.S. government’s primary civil tool to redress false claims for federal funds and property, to bring actions against U.S. government contractors and subcontractors who do not meet the cybersecurity requirements of a particular contract or grant. The U.S. Department of Justice (the “DoJ”) certainly was not bluffing. In the past few months, DoJ has announced the settlement of two False Claims Act cases related to cybersecurity deficiencies or misrepresentations, and more are expected.
As such, it is now imperative that companies executing U.S. government contracts and subcontracts proactively assess their compliance with federal cybersecurity requirements.
The United Arab Emirates (the “UAE”) continues to lead the Arab world in terms of its anti-bribery and corruption (“ABC”) endeavors. The UAE offers a business-friendly environment with an effective and efficient public administration; it criminalizes active and passive bribery, embezzlement, abuse of functions, and facilitation payments, it enforces its domestic ABC legislation and it continues to work with international partners to combat bribery and corruption.
The authors would like to thank Nicole Brenner for her contribution to this post.
Trade secrets offer companies an invaluable advantage over competitors, but only if the company maintains secrecy and responds promptly to threats. If a company’s success depends on its trade secrets, the protections in place to maintain those secrets will be scrutinized in the event of any breach. A previous article in this series discussed the legal and practical ways companies can protect themselves from industrial espionage, including the “reasonable measures” companies must take to protect trade secret information. 18 U.S.C. § 1836. But if there is already a perceived loss of trade secrets, then the company must be prepared to defend the systems in place to monitor any traces of unusual or dangerous behavior. Even if a company takes all reasonable measures to keep proprietary information secret, it is difficult to avoid all potential threats. Yet threats to company trade secrets are increasing, especially technology thefts. Frequently, such thefts are perpetuated by a company’s own employees.
The Wolfsberg Group, an association of thirteen global banks which develops frameworks and guidance for the management of financial crime risks, particularly with respect to KYC, AML, and CFT policies, recently released a set of frequently asked questions on negative news screening and other forms of adverse information searches.
Negative news screening can assist financial institutions in performing customer due diligence, as well as evaluating transactions or activities that are unusual or potentially suspicious. The Financial Action Task Force (FATF), an inter-governmental money laundering and terrorist financing watchdog, recommends that banks, as part of a risk-based approach, include verifiable adverse media searches as part of enhanced due diligence measures.[1] Similarly, while the Bank Secrecy Act does not require negative news screening, U.S. regulators have encouraged banks, as appropriate, to consider negative news.[2] The FFIEC BSA/AML Manual, for example, notes that banks should “establish policies and procedures for determining whether and/or when, on the basis of risk, obtaining and reviewing additional customer information, for example through negative media search programs, would be appropriate.” The Manual continues that the results of negative news screening can help a bank determine when it is appropriate to review a customer relationship.
Recognizing that there is no single, universally agreed approach to negative news screening, the Wolfsberg Group developed its recent guidance to help financial institutions manage their financial crime risks. The guidance is separate from politically exposed persons or sanctions screening, both of which are traditionally list-based. For the purposes of the guidance, the Wolfsberg Group defined “negative news” as “‘information available in the public domain which FIs [financial institutions] would consider relevant to the management of Financial Crime risk.”
The authors would like to thank Thomas Fogarty and Anya Bharat Ram for their contributions to this post.
Section 1832 of the Economic Espionage Act of 1996 (the “Act”) criminalizes the theft of trade secrets “intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner.” 18 U.S.C. § 1832(a). The Defend Trade Secrets Act of 2016 (the “DTSA”) amends the Act to include a civil cause of action for the misappropriation of trade secrets. 18 U.S.C. § 1836(b)(1). Thus, victimized individuals or corporations whose trade secrets were stolen may seek an injunction, monetary damages, or attorneys’ fees. In extreme cases, parties may seek an ex parte seizure to prevent the misuse of stolen trade secrets.
Industrial espionage refers to various activities performed to gain an unfair competitive advantage, including the theft of trade secrets. In previous articles (here and here), we discussed how companies can legally and practically protect themselves from industrial espionage. However, where these protections fail, remedies are available.
Injunction
A court may grant an injunction “to prevent any actual or threatened misappropriation [of a trade secret] . . . on such terms as the court deems reasonable.” § 1836(b)(3)(A)(i). Such an injunction requires the defendant to take affirmative action to protect the secret. § 1836(b)(3)(A)(ii). Yet the court may deny the injunction, but allow the defendant to use the trade secret if they pay a “reasonable royalty” for a specified period of time. § 1836(b)(3)(A)(iii). Any injunction may not prevent the defendant from “entering into an employment relationship with another,” nor may it contradict any state laws “prohibiting restraints on the practice of a lawful profession, trade, or business.” §§ 1836(b)(3)(A)(i)(I)–(II).
Thanks to our Summer Associate, Apollo Yong, for his work on this timely blog.
On June 6, 2022, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of the Treasury, issued an Advanced Notice of Proposed Rulemaking (“ANPRM”), requesting public comment on questions related to FinCEN’s implementation of a no-action letter process.[1] The ANPRM seeks to determine whether the public supports the no-action letter process and how the public expects the process to differ from other forms of relief that FinCEN already offers.
FinCEN’s Report to Congress
FinCEN began considering a no-action letter process after the passage of the Anti-Money Laundering Act of 2020 (the “AML Act”). Section 6305(a) of the AML Act required FinCEN to assess whether it should establish a process for issuing no-action letters in response to inquiries from persons concerning the application of anti-money laundering or countering the financing of terrorism laws (such as the Bank Secrecy Act, the USA PATRIOT Act, and section 8(s) of the Federal Deposit Insurance Act) and regulations to a regulated entity’s specific conduct.[2] Section 6305(b) of the AML Act required FinCEN to submit a report (the “Report”) to Congress, which contains all findings and determinations made in carrying out the no-action letter assessment as well as proposed rulemakings, if appropriate, to implement the findings and determinations the agency made throughout the no-action letter assessment process.
