DPA Means Deferred Prosecution Agreement

Deferred prosecution agreements (DPAs) encourage individuals and companies to provide the SEC with forthcoming information about misconduct and assist with a subsequent investigation. In return, the SEC refrains from prosecuting cooperators for their own violations if they comply with certain undertakings. – SEC

DPA’s are also used by the DOJ.

For a company or an individual who may have unwittingly been involved in financial crime, DPA is often the best option. There are two main types of DPA’s, with and without admission of violation.

Obviously, not admitting to violation is the best option. This option can only be provided if the violator’s intended results were not a violation in themselves. This doesn’t mean it’s the end of the violator’s troubles. The violator may face professional punishments if s/he is licensed or certified. In rare cases, the violator will be barred from the profession.

Wolf of Wall Street by Martin Scorsese via Aerometal

Admitting to the violation only strengthens the case against the violator’s disbarment. On top of that, the violator may face disbarment from the industry regardless of the function. Admission could be career suicide.

It used to be that corporations wanted to avoid admission because it meant suicide for the corporation. But last year, the regulators showed their willingness to work with corporations on leniency, if that’s what it can be called. A number of corporations entered into agreements to admit to wrong doing and pay hefty violations but DPA’s were executed in such a way so that corporations may have taken a hit to their assets, but the shareholders’ equity would not be affected.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.

Applying Lessons from Headline-Making Enforcement Actions to Solidify Your Risk Management Strategy

On Monday, January 26, Associations of Certified Anti-Money Laundering Specialists (hereon ACAMS) held its Third Annual AML Risk Management Conference at The Conrad Hotel in downtown New York. Over the course of this week, summaries and takeaways from the key notes and panel discussions will be shared in this blog.

  • Kieran Beer, CAMS, Editor-In-Chief at ACAMS at Moneylaundering.com
  • Arthur Middlemiss, Esq., CAMS, Partner, Lewis Baach Pllc
  • Jonathan Lopez, Partner, Orrick Herrington and Sutcliffe LLP
  • David Szuchman, Executive Assistant Attorney and Chief of Investigation Division, New York County District Attorney’s Office

HeaderThis panel consisted of three present or former prosecutors. Discussion topics ranged from prevention to remediation for both firms and individuals. These topics were discussed under the context of headline grabbing media reports about large banks. Here are ten takeaways:

  1. Three things for firms and individuals to do to show wrongdoing was not criminal: SELF IDENTIFY wrongdoing, SELF REPORT to regulators, and SELF REMEDIATE wrongdoing with either corrections or plan to correct. – Arthur Middlemiss
  2. Firms and individuals must keep up with the news to avoid common inadequacies that are found; it is expected for them.
  3. Risk Assessment programs are a firm’s first and best line of defense against criminal action.
  4. Criminal action against a firm used to be the said firm’s death sentence, but prosecutors have gone out of their way to make sure it isn’t by timing information flow and the market so that the criminal firm’s shareholders do not take a direct hit while firm’s cash takes a direct hit with penalties.
  5. Willful ignorance is the worst defense for an individual both just as a professional and as a defense for wrongdoing. Willful ignorance is part of the crime.
  6. Compliance Officers are asked to bear more professional risk. With it are higher compensation and higher professional risk. Try to avoid the risk from the very beginning, including negotiating during job interviews/offers.
  7. In negotiating a Deferred Prosecution Agreements, don’t over-promise because DPA’s are conditional.
  8. Compliance programs are an affirmative defense. Need to have them, need them to be implemented, and need documentation showing effort to get the rest of the firm involved.
  9. Some offenses lead to investigation and review into other issues. Such are AML-related offenses, which could trigger a review of the bank charter.
  10. Keep in mind that it is difficult to keep a firm out of compliance at the civil level, but there’s no excuse for not figuring out what it takes to keep the firm out of crimes.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.
He tweets @MoneyCompliance