On October 4, 2023, Deputy Attorney General Lisa Monaco announced the Department of Justice’s (DOJ) new Safe Harbor Policy for criminal misconduct discovered during mergers & acquisitions due diligence and voluntarily disclosed to the DOJ (the “Safe Harbor Policy”). Purchasing companies that timely and voluntarily self-disclose and remediate (including restitution and disgorgement) such misconduct discovered at the target company will receive a DOJ-wide “presumption of a declination.” Importantly, this Safe Harbor Policy would apply to disclosures related to misconduct in all corporate legal compliance areas that are subject to criminal liability, including (but not limited to) FCPA compliance, export controls and sanctions compliance, false claims, information security compliance, AML compliance, and healthcare coding and billing compliance.
The requirements for the safe harbor under the policy are:
- Voluntary Self-Disclosure (VSD) The VSD must involve conduct not already publicly disclosed or otherwise known to the DOJ. The safe harbor also does not apply to information that was required to be disclosed.
- Remediation The acquirer must also fully remediate the conduct involved as well make restitution and disgorgement payments.
- Timeliness As a baseline, the VSD must be submitted within six months of the closing of the transaction, and the company must remediate the misconduct within one year of the closing date. These timeframes could be extended based on a reasonableness review by the DOJ and don’t apply if misconduct threatens national security, or involves ongoing or imminent harm. Such conduct should be disclosed promptly.