Whistleblowers Wanted: U.S. DOJ Announces New Whistleblower Rewards Program

During a keynote speech at the American Bar Association’s 39th National Institute on White Collar Crime last week, Deputy Attorney General (DAG) Lisa Monaco announced that the Department of Justice (DOJ) would implement a new whistleblower rewards program in the near future. More specifically, and drawing an analogy to the tradition of law enforcement incentivizing reporters going back to the issuance of “Wanted” posters in the Wild West, DAG Monaco announced that an individual who aids DOJ in discovering “significant corporate or financial misconduct” could qualify to receive a portion of the resulting penalty as an award. DAG Monaco indicated that more details about the program would be forthcoming.

In this alert, we summarize what is known about DOJ’s new whistleblower program as well as its potential impact on companies’ existing internal compliance reporting channels. This alert also discusses other key topics highlighted in DAG Monaco’s speech, including DOJ’s core strategy of investing “the most significant resources in the most serious cases”; DOJ’s carrot-and-stick approach to encourage companies to voluntarily disclose misconduct; and how DOJ is applying such existing tools as sentencing guidelines and corporate enforcement programs to new and disruptive technologies, like artificial intelligence (AI).

I. New DOJ Whistleblower Rewards Program

In establishing a new whistleblower rewards program, DAG Monaco announced that if an individual aids DOJ in discovering “significant corporate or financial misconduct” of which the DOJ was previously unaware, “the individual could qualify to receive a portion of the resulting forfeiture” as a reward. DOJ intends to launch a pilot program within 90 days and formally start a full program later this year. Speaking at the same conference last week, Acting Assistant Attorney General Nicole M. Argentieri announced that the Money Laundering and Asset Recovery Section will work closely with U.S. Attorneys, the Federal Bureau of Investigation, and other parts of DOJ to further develop the program’s eligibility requirements for potential whistleblowers.

While more details are expected, DAG Monaco’s speech set out some parameters that have already been established. As part of this pilot program, DOJ will offer payments in the following circumstances:

• only after all victims have been properly compensated
• only to whistleblowers who submit truthful information not already known to the government
• only to whistleblowers not involved in the criminal activity itself
• only in cases where there is no existing financial disclosure incentive (e.g., in False Claims Act qui tam actions or via another federal whistleblower program)

Finally, while DOJ will accept tips about violations of any federal law, DAG Monaco emphasized that DOJ has a special interest in knowledge about “criminal abuses of the U.S. financial system; foreign corruption cases outside of the jurisdiction of the SEC [Securities and Exchange Commission], including [Foreign Corrupt Practices Act (FCPA)] violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act; and domestic corruptions cases, especially involving illegal corporate payments to government officials.”

II. The Whistleblower Program’s Impact on Companies’ Existing Internal Compliance Reporting Channels

While DAG Monaco indicated that DOJ hopes to use this program proactively to “fill gaps” not covered by the existing federal whistleblower programs and to “create new incentives for individuals to report misconduct to [DOJ],” her speech was notably silent about how the new whistleblowing program will affect companies’ existing internal compliance reporting systems.

DOJ continues to emphasize the importance of companies’ implementing an effective corporate compliance program, including that companies create a mechanism for employees to confidentially report misconduct. However, as companies continue to invest in these internal channels and protect whistleblowers who use them, DOJ’s new program creates challenges for companies to encourage their employees to report concerns internally instead of to DOJ given the potential for monetary payouts under DOJ’s new program.

This is particularly the case where the SEC reported that its existing whistleblower program received the largest number of annual tips in the history of the program during the past fiscal year (more than 18,000, almost 50% more than in 2022). Additionally, the SEC announced that its past fiscal year saw the highest aggregate and individual awards to whistleblowers, with $600 million awarded to 68 whistleblowers, including nearly $279 million awarded to a single whistleblower. The potential of similar monetary payouts by DOJ will likely encourage whistleblowers to bring their concerns to DOJ first or in lieu of contacting companies’ internal reporting channels.

III. DAG Monaco’s Emphasis on Preexisting DOJ Policies

During her remarks, DAG Monaco also reiterated DOJ’s commitment to existing policies, including investing DOJ’s “most significant resources in the most serious cases”; holding individuals accountable; and seeking tougher penalties for repeat offenders. DAG Monaco also noted DOJ’s continued approach of using carrots and sticks to motivate companies to be forthcoming and proactively report misconduct to the government. DAG Monaco was clear that “neither companies nor individuals can afford to sit on evidence of wrongdoing” and encouraged those contemplating voluntary self-disclosure to approach the DOJ before the DOJ approached them.

Finally, DAG Monaco discussed DOJ’s recent initiative, “Justice AI,” which she described as “a series of convenings with stakeholders across industry, academia, law enforcement, and civil society” to contend with the effects of AI. DAG Monaco further stated that where AI is “deliberately misused to make a white-collar crime significantly more serious,” prosecutors will seek stiffer sentences. In addition, prosecutors will now evaluate a company’s ability to manage AI-associated risks as part of its overall compliance efforts. Indeed, DAG Monaco stated that the Criminal Division’s Evaluation of Corporate Compliance Programs guidance will incorporate an assessment of disruptive technology risks, including AI.

DOJ’s newly announced whistleblower reward program is the latest incentive in DOJ’s carrot-and-stick approach to encourage companies and individuals to “step up and own up and report misconduct.” The incentive program, when coupled with the DOJ’s stance on voluntary self-disclosure, is also likely to create new considerations for companies (and their counsel) when identifying and investigating potential misconduct. While many details of the new program are yet to be announced, it is already clear that it is important for companies to consult their outside counsel about key decisions regarding investigating allegations and considering self-disclosure given the likely increased risk of whistleblowers’ bringing allegations of misconduct directly to DOJ.