Executive Summary
- The U.S. Department of Justice has expanded the Corporate Enforcement and Voluntary Self-Disclosure Policy (the "CEP") to most DOJ components (except for the Antitrust Division).
- The CEP provides strong incentives for companies to voluntarily disclose corporate misconduct in hopes of obtaining a full declination of criminal charges, or else a non-prosecution agreement ("NPA"), or at least discretionary lenient treatment.
- The CEP, while offering compelling cooperation incentives, is not a one-size-fits-all panacea, and smaller businesses in particular would be well advised to approach voluntary self-disclosure decisions with appropriate caution, and with the advice of experienced counsel.
Introduction
On March 10, 2026, the Criminal Division of the U.S. Department of Justice (the "DOJ") announced the extension of its Corporate Enforcement and Voluntary Self-Disclosure Policy (the "CEP") to all DOJ components (with the exception of the Antitrust Division, which has its own policy). Previously, a similar policy had applied on a limited basis within the Fraud Section, and had been adopted by only some U.S. Attorney's Offices. The roll-out of a consistent policy is welcome, although the implications for big and small businesses may be quite different, as explained below.
Like its predecessors, the CEP seeks to "incentivize responsible corporate behavior" through voluntary reporting of corporate malfeasance in furtherance of "the public's interest in rooting out fraud and misconduct." The CEP promises to reward self-reporting companies for disclosing potential criminal misconduct early, remediating promptly, and cooperating fully with government prosecutors. The CEP promises more certain and favorable resolutions for qualifying entities, in the form of presumptive declinations of prosecutions or non-prosecution agreements ("NPAs"). And for those who fail to qualify completely, DOJ is still dangling incentives for disclosure.
While the outcome of DOJ's actual application of the CEP on a Department-wide basis remains to be seen, the policy introduces several changes that companies and their counsel should carefully consider in weighing the potential costs and benefits of disclosure. This is even more true for small and closely held companies, where prosecutors may perceive the separation between culpable individuals and owners or management to be thinner, making the potential benefits of disclosure less clear.
The CEP
The CEP incentivizes companies to voluntarily self-disclose potential criminal conduct and cooperate with DOJ investigations. Prior DOJ policies were limited to particular DOJ "components" (e.g., the Foreign Corrupt Practice Act Unit) and select regional U.S. Attorney's Offices ("USAOs"). The new CEP, however, applies to virtually all DOJ Main Justice components (except, as noted above, the Antitrust Division) and all USAOs. As before, the CEP sets forth the same eligibility requirements, while seeking to "minimize uncertainty" by delineating three distinct (and favorable) pathways to resolving potential corporate liability.
Path 1 – Declination of Prosecution. To be eligible for an outright declination of prosecution, a company must meet four requirements. First, the company must voluntarily self-disclose its potential misconduct to a DOJ criminal component reasonably promptly after becoming aware of it. DOJ must not have previously known of the misconduct and the disclosure must occur "prior to an imminent threat of disclosure or government investigation." Second, the company must fully cooperate with DOJ by, among other things, preserving and disclosing all facts and non-privileged evidence relevant to the conduct in a timely, truthful, and accurate manner. Fulsome cooperation includes proactively identifying opportunities to obtain evidence that is not in the company's possession or otherwise known to DOJ. Third, the company must timely and appropriately remediate the misconduct by addressing its root causes, implementing effective compliance and ethics programs, disciplining (or, if appropriate, terminating) responsible employees, and maintaining and enforcing business records retention. Fourth, there must be no aggravating circumstances, such as egregious or pervasive misconduct within the company, or a corporate criminal adjudication or resolution within the last five years, or based on similar misconduct.
If a company satisfies all factors, the DOJ "will" forgo criminal charges against the company and levying what could otherwise be substantial criminal fines or penalties. Though a declination does not relieve the corporate entity of disgorgement of any ill-gotten proceeds of the misconduct, that limited remedy is a welcome alternative to criminal charges, with all the collateral consequences they can entail. Importantly, however, DOJ emphasizes continued focus upon culpable individuals within a company, a concept hearkening back to the "Yates Memo," and which, as noted below, can materially impact a smaller business's decision to voluntarily disclose.
Importantly, given DOJ's entirely separate Whistleblower Awards Pilot program, the CEP provides that a company's disclosure will still qualify as voluntary if it reports to DOJ within 120 days of receiving an internal whistleblower report.
Path 2 – The "Near Miss" Non-prosecution Agreement. If a company fails to meet each of the four declination requirements, it may nonetheless be eligible for an NPA, under the CEP. Namely, if a company fully cooperates with DOJ's investigation and timely and appropriately remediates its misconduct (but has not satisfied the requirement of timely voluntary disclosure), it can still receive an NPA in two instances: First, if the company self-reported in good faith but it did not constitute a "voluntary self-disclosure," as defined. Second, if an aggravating factor exists that warrants criminal resolution, but is not egregious or pervasive. In a "near miss" scenario, the CEP states that DOJ "shall" provide an NPA with a term less than 3 years, no independent compliance monitor, and a 75% reduction off the low end of the applicable guidelines fine range. In other words, even imperfect cooperation can entitle a disclosing company to significant benefits.
Path 3 – Discretionary Resolutions. Finally, where a company does not technically qualify for either a declination or NPA, the CEP recognizes that prosecutors always retain discretion to negotiate an appropriate alternative resolution. It does, however, limit the potential discount on monetary penalties a prosecutor can provide, because in this scenario DOJ will not recommend a reduction of more than 50% off the guidelines fine range. But, if the company fully cooperates and timely and appropriately remediates, the presumption will be that any reduction will come off the low end of the guidelines.
Implications for Smaller Businesses. The carrots described above are indeed tantalizing. And yet, it would be a serious mistake to assume that the near universal application of the CEP across most DOJ components has produced a one-size-fits-all option for businesses of all sizes, or that the analysis of risk will be monolithic for all putative targets. Indeed, the calculus is likely to be very different for companies of different sizes. In our experience, the CEP may work to the great benefit of large (and especially public) companies. Those entities are more likely to have sophisticated compliance programs capable of detecting misconduct in the first place, enabling them to make timely voluntary disclosures. They will also have the ability to wall off misconduct, enhance compliance, and "offer up" culpable individuals on a silver platter. By the same token, in larger companies the nature of the misconduct is more rarely endemic, so misconduct in larger companies is less likely to be viewed as egregious or pervasive. Finally, a significant reason for corporate resolutions is frequently to avoid harm to innocent bystanders, such as public stockholders, by imposing a fine, while allowing the business to continue in existence.
But consider the vantage point of a smaller business owner without the same resources, without public stockholders, and whose "culpable individuals" are more likely to reach into the management if not ownership ranks of the company. Voluntary disclosure under those circumstances may be a polite euphemism for "corporate suicide." Thus, a smaller business weighing a self-disclosure would do well to consider whether it is signing up for a pyrrhic victory, and perhaps not even that. These are difficult and incredibly nuanced decisions that will require small businesses to consult counsel with judgment, extensive experience, and the credibility to constructively engage with the government to achieve a fair and just resolution.
