Financial crimes under the United States federal system are often defined as a “scheme to defraud”, which is a phrase used in many of the federal criminal statutes relating to financial crimes, including the mail and wire fraud, bank fraud, securities fraud, and similar statutes. A scheme to defraud requires proof of a material misrepresentation, or the omission or concealment of a material fact calculated to deceive another out of money or property. Thus, in the context of bank fraud, a defendant engages in a scheme to defraud by engaging in a pattern or course of conduct designed to deceive a federally chartered or insured financial institution into releasing property, with the intent to victimise the institution by exposing it to actual or potential loss.

For a financial crime to be charged federally in the United States, there must be a federal jurisdictional nexus, such as the use of US mails or wires that cross interstate lines, or the involvement of a federally chartered institution.

In addition to the broad “scheme to defraud” financial offences, the United States also criminalises specific kinds of conduct, such as insider trading, money laundering, and public corruption. The constituent elements of insider trading are (1) a material misrepresentation; (2) intent; (3) a connection with the purchase or sale of a security; (4) reliance; (5) economic loss; and (6) loss causation, or a causal connection between the misrepresentation and the loss.

The constituent elements of money laundering are (1) conducting or attempting to conduct a financial transaction, (2) knowledge that the transaction involved proceeds arising from unlawful activity, and (3) the requisite intent or knowledge. A defendant is liable for money laundering when, among other things, the conduct involves engaging in a financial transaction with the intent to promote the carrying on of specified unlawful activity, or knowing that the transaction is designed to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity.

Corruption is divided between bribing US officials and bribing foreign officials. Proving bribery of a US official requires that the official have a corrupt state of mind and accept (or agree to accept) the payment intending to be influenced in the official act. Payments to foreign officials are criminalised where they are intended to (1) influence a foreign official to act or make a decision in his or her official capacity, or (2) induce such an official to perform or refrain from performing some act in violation of his or her duty, or (3) secure some wrongful advantage to the payor.

The government always bears the burden of proving all elements of an offence beyond a reasonable doubt. This standard is well-known but not always well-understood by practitioners outside of the United States. Proof beyond a reasonable doubt does not require the government to prove a criminal defendant guilty beyond all possible doubt. Proof beyond a reasonable doubt means that the evidence is of such a convincing character that a reasonable person would not hesitate to rely and act on it in the most important of his or her own affairs. This standard of proof is a much heavier burden than is required at the charging stage where the government must demonstrate probable cause. For the government to charge a person with a financial crime, it must demonstrate only that it is more likely than not that the defendant is the person named in the charging instrument and that he or she has committed the financial crime(s) alleged therein.

Under US federal law, there is a general aiding and abetting statute – 18 U.S.C. 2 – that provides that anyone who “aids, abets, counsels, commands, induces or procures” the commission of an offence against the United States is “punishable as a principal”, and is subject to the same penalties as if he or she had committed the crime himself or herself. 

The United States also has a general conspiracy statute that criminalises (1) an agreement among two or more persons, the object of which is an offence against the United States; (2) the defendant’s knowing and wilful joinder in that conspiracy; and (3) commission of an overt act in furtherance of the conspiracy by at least one of the alleged co-conspirators. Section 371 has a maximum sentence of up to five years in prison. 

Additionally, several financial crimes, such as money laundering, securities fraud, and mail and wire fraud are subject to separate conspiracy statutes which apply to conduct specific to those crimes and provide for substantially longer prison sentences than provided for under Section 371.

Federal financial crimes, such as those that violate the wire and mail fraud statutes, the securities laws and similar financial crimes, generally have a five-year statute of limitations period. However, certain financial crime statutes have longer statutes of limitations. For example, offences involving securities fraud have a limitations period of six years and financial crimes that affect a financial institution have a ten-year statute of limitations.

Certain financial crimes apply extraterritorially where Congress has expressed the intent that the criminal statute should apply extraterritorially. These financial crimes include money laundering, certain portions of the Foreign Corrupt Practices Act, and certain sanctions laws.

US law enforcement authorities often face challenges obtaining relevant evidence and identifying relevant witnesses in connection with extraterritorial criminal conduct. However, there are a number of tools to assist them in obtaining such evidence. These include, but are not limited to, Mutual Legal Assistance Treaties (MLATs) with many countries that provide a formal, binding, and reciprocal mechanism to request testimony, documents, or bank records located in foreign countries. Authorities may also use letters rogatory, which are applications to a foreign court seeking judicial assistance.

US law enforcement agencies often have agreements with their foreign counterparts to share information and intelligence. For example, the SEC uses multilateral and bilateral information sharing agreements – often called “memoranda of understanding” or MOUs – to facilitate consultation and co-operation with its foreign counterparts. These MOUs establish clear guidelines and protocols for exchanging information.

Under the Clarifying Lawful Overseas Use of Data (CLOUD) Act enacted in 2018, US authorities also can compel US-based service providers to produce electronic data (emails and texts) pursuant to a warrant, even if such data is stored outside of the United States.

In the United States, there must be a valid treaty providing for extradition of a suspect to a requesting country. US treaties generally require a dual criminality element, which means that the criminal conduct for which the requesting country is seeking extradition must also constitute a criminal offence in the United States. While the United States is a party to numerous extradition treaties with its allies, there are several other countries with whom it has no such treaties. Those countries include China, Russia, and Venezuela. However, depending on the circumstances, with certain non-treaty countries with whom the United States has friendly relations, it may agree to deport suspects based on special agreements or diplomatic negotiations. Vietnam, for example, is a non-treaty country with which the United States has made special agreements.

The Department of Justice (DOJ) is the principal federal law enforcement agency charged with investigating and prosecuting financial crimes. Within DOJ, the Criminal Division in Washington, D.C. or the 93 US Attorney’s Offices across the United States are authorised to prosecute federal crimes, including financial crime offences.

With regard to financial crimes, DOJ works with numerous other law enforcement agencies, including without limitation, the Federal Bureau of Investigation (FBI), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).

It is common for law enforcement agencies to conduct criminal and civil investigations in parallel. For example, in a False Claims Act case, the DOJ’s Criminal and Civil Divisions may co-ordinate their investigation and enforcement activities. In the securities law context, DOJ’s Criminal Division often co-ordinates its criminal investigation with the Securities and Exchange Commission (SEC), which is responsible for the civil enforcement of the federal securities laws. There also are scenarios in which a federal agency like DOJ may work together with one or more of the Attorneys General of the 50 US states to prosecute crimes in a specific jurisdiction, multiple jurisdictions, or nationwide.

Financial crime investigations are initiated through a variety of means. In some cases, authorities may receive reports from victims or tips from whistle-blowers. These reports may go to one of the investigative agencies, like the FBI, SEC, and CFTC. Reports also can be made directly to DOJ or one of the US Attorneys’ Offices. Financial crime investigations also may be initiated as a result of suspicious activity reports from banks and criminal referrals from other state or federal agencies, among other sources.

Additionally, several federal agencies have their own whistle-blower programmes designed to encourage individuals to report misconduct (often in exchange for not being prosecuted or potential financial awards if information results in a successful recovery for the government). For example, a company involved in misconduct may voluntarily self-report to the authorities pursuant to one of various leniency programmes and policies that DOJ and US Attorneys’ Offices have created. The DOJ’s Antitrust Division has a prominent leniency programme that offers “amnesty” to a company if it complies with the applicable requirements. Based on the information it receives through these programmes, DOJ can identify and investigate other culpable companies and individuals.

Federal authorities have broad discretion over which cases to investigate and which companies and individuals to prosecute. At the federal level, DOJ prosecutors rely on the Justice Manual, which includes principles for when to bring charges against companies and individuals. These principles are intended to “promote the reasoned exercise of prosecutorial authority and contribute to the fair, even-handed administration of the federal criminal laws”.

Federal law enforcement authorities have broad powers and tools to investigate financial crimes. Both criminal and civil agencies can compel the production of documents and testimony through subpoenas. 

In criminal cases, the government has several powerful enhanced investigatory tools. These include the ability to obtain wiretaps pursuant to a court order, execute search warrants pursuant to judicial review, and record meetings and telephone calls through co-operators and undercover agents.

The government also can request voluntary co-operation from companies and individuals, including requesting documents and information, and interviews of suspects and witnesses in the investigation. In contrast with subpoenas and search warrants, the recipients of voluntary requests are free to decline to co-operate with the government’s investigation.

Finally, the government has the ability through criminal and civil procedures to seek the forfeiture of assets involved in or resulting from financial crimes. The government may also freeze such assets pending the outcome of the criminal proceedings.

Law enforcement authorities in the United States routinely use technology as part of their investigations. In financial crimes investigations, they often use AI and other forms of electronic data surveillance to identify and investigate potential financial crimes. DOJ recently has invested in specialised personnel and tools, and has announced that it will be doubling down on these efforts. For example, in wire fraud and money laundering cases, federal authorities have worked with blockchain analytics firms to gather information about a cryptocurrency, its transaction history and trading frequency.

With the rapid advancement of AI tools, companies and executives can expect that the US enforcement authorities’ use of data analytics and similar investigative tools will become more sophisticated and substantially increase.

When management at companies learns about potential financial misconduct by their employees, they regularly will conduct an internal investigation to understand whether the alleged misconduct actually occurred, as well as the nature and extent of that misconduct. To fulfil their fiduciary duties, officers and directors must investigate allegations of material financial misconduct and can rely on the results of their internal investigations to make decisions about how to deal effectively with the financial misconduct if it has occurred.

The communications, findings, and conclusions of internal investigations generally are protected by the attorney-client privilege and work product doctrine. Companies often use the results of their internal investigations to voluntarily disclose information to law enforcement authorities to get credit for their co-operation, including reduced or no criminal charges in the form of favourable plea agreements, deferred prosecution agreements, non-prosecution agreements and outright declinations of prosecution.

DOJ has created strong incentives for companies to self-report their financial misconduct to obtain such favourable outcomes. DOJ’s current Corporate Enforcement Policy specifically provides for a declination of prosecution if a company timely and voluntarily self-discloses its misconduct (ie, before the government is aware of or independently opens its own investigation); fully co-operates with an ensuing government investigation; and remediates the issues underlying the misconduct; and where there are no aggravating circumstances relating to the nature and seriousness of the offence. Even if the company does not timely self-report, but nevertheless co-operates fully and in good faith, it can obtain co-operation credit that can result in an outcome that avoids criminal prosecution.

It is common for financial crime investigations to involve arrests or interviews of suspects. Witnesses, subjects and targets of an investigation also may be subpoenaed before a grand jury to testify and provide documents, or they may agree to be interviewed and produce documents voluntarily – both before and after charges are brought.

Any individual in the United States may elect not to co-operate with an investigation, and has a constitutional right under the Fifth Amendment not to speak with the authorities if doing so might incriminate themselves. The right against self-incrimination extends throughout the criminal investigation and prosecution process but is directed at testimonial self-incrimination. Importantly, the right against self-incrimination does not apply to corporations, and corporations can be compelled to produce documents and information.

Individuals may be compelled to produce company documents as well as private documents and information in their possession so long as, with regard to the private documents, the act of producing them – which is deemed to be testimonial – does not incriminate them by admitting the private documents exist, are authentic or are in their possession. The government ordinarily can get around the “act of production” issue by granting “act of production” immunity or by claiming that the act of production adds little or nothing to what the government already knew and could prove.

If a company or witness wilfully fails to comply with a subpoena to produce documents, they may be held in criminal contempt or potentially be charged with additional crimes for obstructing justice. Similarly, if a company or witness destroys documents called for production by a subpoena, they also can be charged with obstructing an investigation, and in civil cases, the jury may be instructed that they can draw an inference that whatever information was in the destroyed documents would have been adverse to the destroying party’s case.

In connection with financial crimes cases, the government can seek a restraining order over the assets of those individuals or companies that are the target of the government’s investigation – after notice and hearing – if it is able to demonstrate a substantial probability that it will prevail on seeking the assets’ forfeiture, that without the order the property may be destroyed, removed, or otherwise made unavailable, and that its preservation needs outweigh any hardship to the individual or company. The government also may seek an ex parte temporary restraining order before an indictment is filed based on a showing of probable cause that the property would be forfeitable and that giving notice would jeopardise the property’s availability.

The government has similar pre-charge tools under civil forfeiture laws.

The principal fraud offences are mail and wire fraud. These offences require the government to prove (1) the existence of a scheme to defraud; (2) an intent to defraud; (3) use of the mails or wires; and (4) materiality of the misrepresentations or omissions in the scheme.

There are three well-known corruption statutes.

• First, the Foreign Corrupt Practices Act (15 U.S.C. 78dd1, et seq.) prohibits (1) US companies from; (2) making payments or offering anything of value; (3) to a foreign official; (4) with a corrupt intent to influence the official to act in violation of their duty or to secure an improper advantage to retain or obtain business.
• Second, the Federal Bribery Statute (18 U.S.C. 201) prohibits (1) payment of money or a thing of value; (2) to a federal official; (3) with a corrupt intent to influence the official; (4) to undertake an official act in violation of their duty.
• Third, Federal Program Bribery (18 U.S.C. 666) prohibits (1) the offering, soliciting, or accepting of any items of value; (2) to an agent of an organisation receiving federal funds; (3) with the corrupt intent to influence or reward the agent to engage in an official act.

To prove money laundering, the government must show that (1) the money at issue was derived as proceeds from specified illegal activity; (2) the defendant conducted or attempted to conduct a financial transaction; (3) with knowledge that the funds were derived from criminal activity; and (4) the transaction was intended to conceal the source or ownership of the money, avoid reporting requirements, or promote further illegal activity.

Financial institutions have an array of anti-money laundering obligations, including (1) the verification of the identity of new customers; (2) conducting ongoing risk-based monitoring of business relationships to identify high-risk customers; (3) identifying actual individuals that own or control a legal entity customer; (4) monitoring transactions and filing suspicious activity reports for activity suspected to be linked to fraud, money laundering, or terrorism; (5) developing internal policies and training staff to identify suspicious activity; (6) conducting regular and independent audits of an anti-money laundering programme; and (7) retaining customer identification and transaction records for a minimum required period.

Section 10(b) of the Securities Exchange Act, and SEC Rule 10b-5, are the primary regulations governing insider trading, market manipulation, misleading disclosures, and unauthorised financial services activity. Section 10(b) prohibits the use of any “manipulative or deceptive device or contrivance” in violation of regulations governing the purchase or sale of securities. Rule 10b-5 prohibits fraud, material misstatements, omissions, and deceptive practices in connection with the purchase or sale of any security.

Federal prosecutors and SEC lawyers often rely on Section 10(b) and Rule 10b-5 in criminal and civil enforcement actions involving insider trading, pump-and-dump or short-and-distort schemes, or misleading disclosures in corporate documents in which material facts are omitted or deceptive half-truths appear.

There is a federal law that criminalises any attempt to evade or defeat a tax or its payment in any manner. There are closely related criminal offences, including wilfully filing a materially false return, and aiding or abetting the preparation of a materially false return.

While there is no specific statute criminalising false accounting, such conduct generally falls within the purview of criminal laws and regulations like falsifying books and records, making false statements, and wilfully failing to keep required records.

Finally, while there is no standalone corporate offence for failure to prevent tax evasion, companies can be and often are held criminally liable under a respondeat superior theory – for the illegal acts of their directors, officers, employees, or agents associated with tax evasion. Stated differently, under US law, corporations generally are criminally liable for the illegal acts of their employees, management and directors that benefit the company – even if those acts violate a company’s policies.

There are three primary antitrust, cartel, and competition laws.

• First, the Sherman Act prohibits agreements that unreasonably restrain trade, including price-fixing, bid-rigging, and customer allocation. It also makes it illegal to monopolise trade.
• Second, the Clayton Act prohibits mergers or acquisitions that may substantially lessen competition or tend to create a monopoly. The Clayton Act provides only civil penalties.
• Third, the Federal Trade Commission Act prohibits unfair methods of competition and unfair or deceptive acts and practices. This act is a civil statute that the government may use to initiate civil and administrative proceedings against the defendant.

Generally, the US mail and wire fraud statutes can be used to prosecute conduct involving the counterfeit of intellectual property. More specifically, 18 U.S.C. 2320 is the primary criminal statute used to prosecute the sale, manufacture, or distribution of goods or services using a counterfeit mark. This statute covers the general trafficking of counterfeit goods and services, military goods, and pharmaceutical products.

The US Economic Espionage Act (EEA) also criminalises the theft of intellectual property that constitutes trade secrets. It is codified at 18 U.S.C. 1831 – 1839. Section 1832 criminalises the commercial theft of trade secrets and other statutes criminalise economic espionage intended to benefit a foreign government. In criminal cases, an individual who violates the EEA faces up to ten years’ imprisonment and corporations face the greater of USD5 million or three times the value of the stolen trade secret. The EEA also provides for criminal forfeiture, destruction of the stolen trade secrets and restitution. On the civil side, DOJ or the trade secret owner can seek injunctive relief, and trade secret owners can sue for actual losses, unjust enrichment or a reasonable royalty as well as ex parte seizure in extraordinary circumstances, among other remedies.

In the United States, the Clean Air Act and the Clean Water Act are well-known environmental statutes that criminalise the negligent or knowing discharge of hazardous pollutants into the air or water. One of the most prominent criminal cases involving the Clean Air Act is the prosecution of car manufacturer Volkswagen, which pled guilty to three felony counts and a USD2.8 billion penalty for running a scheme to sell diesel vehicles that were installed with a defeat device to cheat on emission tests mandated by the Environmental Protection Agency (EPA).

A financial crime prosecution can be initiated in one of three ways: (1) a criminal complaint, (2) an indictment returned by a grand jury, or (3) the government’s filing of an information. A criminal complaint is a document that states the essential facts constituting the offences charged and must be sworn by a law enforcement officer in front of a magistrate judge or other suitable judicial officer. It must establish probable cause to believe that the defendant charged in the complaint committed the offences that are charged. It is a temporary charging instrument and is used if a case must be initiated quickly. A complaint must be followed by one of the other two methods of initiating a criminal prosecution – an indictment or an information.

An indictment is the classic way in which a financial crime is initiated. To obtain an indictment, the government must present its case through testimony and physical evidence to a grand jury consisting of 16 to 23 citizens, 12 of whom must agree that there is probable cause to support the indictment, which is then returned to a magistrate judge. Depending on the sensitivities and circumstances of the case, an indictment may be sealed by the court until the defendant is arrested.

The third way that a financial crime prosecution can be initiated is through the filing of an information. An information contains the same statement of essential facts as is in an indictment and must be signed by the prosecutor, but rather than being returned by a grand jury that has heard all of the government’s evidence, the government can proceed by information only if the defendant waives his or her right to proceed with an indictment by a grand jury.

A prosecutor makes the decision whether to charge a person with a financial crime. A federal prosecutor’s decision is governed by several documents. First, there are specific Rules of Professional Responsibility that outline the special responsibilities of a prosecutor. For example, a prosecutor may not proceed with a prosecution if he or she knows that a charge is not supported by probable cause. Second, the Principles of Federal Prosecution in the Justice Manual set forth numerous guidelines that federal prosecutors should consult to inform their decision to charge a defendant. Among a host of other considerations, these principles cover the circumstances under which a declination is appropriate, identify which charging considerations are permissible or impermissible, and whether a non-criminal alternative should be pursued.

Under the Sixth Amendment, defendants in criminal cases are entitled to a speedy trial. The Speedy Trial Act of 1974 dictates the time limits for processing defendants, and requires an indictment to be filed within 30 days of an arrest, and for a trial to begin within 70 days of the indictment or an initial appearance by the defendant. The time under the Speedy Trial Act may be extended if a court determines that the “ends of justice” are served by doing so. In many complex cases, these extensions allow the parties additional time to prepare for trial.

Defendants may apply for bail or pretrial release. In deciding whether to grant bail, courts will consider the history and characteristics of the defendant, including whether he or she presents a risk of flight, and whether he or she poses a danger to the community if released; the nature and circumstances of the charged offence; and the weight of the evidence. Because financial crime cases are almost always non-violent in nature, the court is likely to grant bail unless it believes the defendant poses a serious risk of flight or a risk that he or she will tamper with evidence or witnesses. Bail decisions are within the discretion of the court. The conditions of bail can range from a personal recognisance bond or a significant monetary bond secured by cash or real property, among other conditions such as the surrender of a passport.

Under the Sixth Amendment of the US Constitution, indigent defendants who cannot personally afford a lawyer are entitled to have one appointed for them by the court. The court will either appoint a Federal Defender or a private defence lawyer designated to serve as trial counsel under the Criminal Justice Act (CJA). A Federal Defender or CJA lawyer is compensated through government funding. A defendant is not required to make any contributions, irrespective of whether he or she is acquitted or convicted at trial.

At the federal level, financial crimes are prosecuted in the United States District Court, which is the trial court created pursuant to Article III of the US Constitution. District Court judges, who are appointed by the President and confirmed by the US Senate, oversee these cases. In many instances, a Magistrate Judge of the court will handle pre-trial proceedings, such as the initial arraignment of the defendant or bail determination. However, the District Court judge will handle the trial and will sentence the defendant in the event of a conviction.

If a defendant is charged, his or her criminal case is typically brought in the venue where the crime occurred. The defendant may challenge the venue on the basis that he or she cannot receive a fair trial due to a prejudicial pool of jurors, pretrial publicity, or convenience, and the court will ultimately decide whether the venue is proper.

At the federal level, criminal cases are tried before a jury of 12 citizens. At the outset of a trial, the parties will have an opportunity to engage in a screening process called “voir dire”, where they can question and evaluate potential jurors before empanelling a jury.

Under US law, companies are deemed to act through their agents and employees. If a company is charged with committing a crime, it is because its agents and employees engaged in criminal conduct when acting in the course of their agency or employment. Thus, companies and individuals may be prosecuted concurrently. More often, a company will seek to avoid the risk of a trial and enter into a negotiated resolution, such as a deferred prosecution agreement or a plea to reduced charges.

As a general matter, companies are distinct legal entities and thus are not liable for one another’s conduct. However, under principles of agency law, there are instances in which a parent company may be liable for the actions of its subsidiary. Courts will evaluate the degree of control the parent had over the subsidiary – or whether the subsidiary was an alter-ego of the parent – and played an active role in the subsidiary’s activities forming the basis of any criminal charge. This is a fact-specific analysis.

Companies are expected to maintain compliance programmes to ensure compliance with the law. However, not all compliance programmes are the same. They are often tailored to the company’s specific business, risks, and size, among other factors. In any event, the existence of an effective and adequate compliance programme is a significant factor when prosecutors evaluate a charging decision. The Principles of Federal Prosecution of Business Organizations instruct prosecutors that they should consider the “adequacy and effectiveness of the corporation’s compliance programme at the time of the offense, as well as at the time of the charging decision” and the corporation’s remedial efforts “to implement an adequate and effective corporate compliance programme or to improve an existing one”.

While the availability of a defence is dependent on the specific criminal offence, very often defendants will challenge the sufficiency of evidence regarding the element of “mens rea”. Many criminal statutes have a “specific intent” requirement that a defendant acted “wilfully” or “knowingly” in violating certain criminal statutes. Because intent is often proven through circumstantial evidence, defendants will invoke challenges to such evidence as part of their defence.

In 2024, DOJ’s Criminal Division introduced a Corporate Whistleblower Awards Pilot Program designed to incentivise tips from whistle-blowers that would uncover corporate crime. Under the programme, any whistle-blower who provides the Criminal Division with original and truthful information about corporate misconduct that results in a successful forfeiture of assets may be eligible for an award. Thus, the bargain is simple – if the whistle-blower reports corporate misconduct, and the tip results in a prosecution and forfeiture, then the whistle-blower may receive a financial award.

The programme permits the whistle-blower to submit his or her tip anonymously through a lawyer. However, even if a whistle-blower reports conduct without a lawyer – and is thus required to disclose his or her identity to DOJ – there are assurances that DOJ will protect the confidentiality of the whistle-blower except as required by law or some other compelling need or interest.

Financial crime cases are principally resolved in three ways. First, the government may prosecute a defendant charged with a financial crime and obtain a conviction if it successfully proves beyond a reasonable doubt that the defendant committed the crime. If the defendant is convicted after a trial, he or she will be sentenced by the court to a term of imprisonment, a fine, or both.

Second, a defendant may choose to plead guilty, and in most cases will negotiate an agreement with the government under terms and conditions that are more favourable than if the defendant were convicted at trial. Under a plea agreement, the defendant must allocute to (admit to) having engaged in conduct that constitutes the offences to which he or she is pleading guilty and admit that he or she knew what he or she was doing was wrong. Very often a defendant and the government also will agree to the calculations under the advisory Federal Sentencing Guidelines, which every federal judge must consider when determining a defendant’s sentence. Some defendants – in the hopes of obtaining a reduced or no sentence of imprisonment – may seek to enter into a plea agreement known as a co-operation agreement which requires that he or she agree to co-operate with the government’s prosecution and provide any requested information and truthful testimony in support of the government’s prosecution. If the government agrees, the co-operation is provided in exchange for the government’s agreeing – if it determines it is appropriate – to write a letter to the court informing it of the nature and extent of the defendant’s co-operation that the court can take into consideration when determining what sentence to impose.

Third, the government may decline or defer prosecution after considering the evidence relevant to the financial crime. While the circumstances of a non-prosecution or deferred prosecution agreement are case specific, the government typically enters into these agreements where the defendant has voluntarily and promptly disclosed its misconduct, co-operated with the government’s investigation, and engaged in remedial steps.

Individuals convicted of a crime are subject to a sentence of imprisonment, fines, forfeitures of assets, and supervised release or probation. Companies that are convicted of a crime are subject to a fine, forfeiture of assets, and other consequences, such as debarment.

In federal court, judges are required to apply the sentencing factors set forth in 18 U.S.C. 3553(a). Among other things, under Section 3553(a), courts are guided by the principle that they should impose a sentence that is “sufficient, but not greater than necessary” to achieve the goals of sentencing. The goals of sentencing under Section 3553(a) are to reflect the seriousness of the offence, promote respect for the law, and provide a just punishment for the offence. Other goals include adequate deterrence to criminal conduct; protection of the public from further crimes of the defendant; and provision to the defendant of the necessary education or vocational training, medical care, or other correctional treatment. In addition, federal courts are required to consider – but are not required to impose – a sentence that falls within the guidelines range recommended by the Federal Sentencing Guidelines.

Thus, courts will consider mitigating circumstances and factors in evaluating whether a specific sentence is sufficient to satisfy the goals of sentencing. Mitigating factors include the personal background and characteristics of the defendant, his or her role in the offence, his or her mental and physical health, his or her remorse and rehabilitation, and the lack of a criminal history. Mitigating factors for corporations include whether they have an effective compliance programme, whether they self-reported the conduct and co-operated with the government, the nature and extent of their role in the offence, acceptance of responsibility, and any other remedial efforts they have taken. Such factors may, in the court’s discretion, support a more lenient sentence.

Forfeiture proceedings are legal proceedings following a conviction aimed at recovering any financial gain or benefit from the criminal’s conduct. The governing statutes for these proceedings are 21 U.S.C. 853, which is incorporated by reference in 18 U.S.C. 981 and 982, and Federal Rule of Criminal Procedure Rule 32.2. Forfeiture proceedings occur “following conviction of a substantive criminal offense”, and apply to (1) any property constituting or derived from proceeds obtained as a result of the violation; (2) any property used or intended to be used to commit or facilitate the offence; and (3) any property affording control over an ongoing criminal enterprise.

Once the court determines which property is forfeitable, it enters a preliminary order which becomes final after sentencing, and the government need only prove that the property at issue is subject to forfeiture “by a preponderance of the evidence” – a lower standard than the usual “beyond a reasonable doubt” in criminal cases.

After forfeiture is ordered, the government must publish a notice of the order to notify potential interest holders in the property at issue. Those alleged interest holders may petition to be heard on their alleged interests in the property and are subject to the same standard of proof as the government. Then, the government may seize all property ordered forfeited, and may direct its disposition through many tools, including commercial sale, and the appointment of receivers and conservators to maintain the property. In the event a court cannot locate assets due to a defendant’s actions, the court can order substitute assets to satisfy a money judgment. Finally, forfeiture may extend to interest accrued on forfeitable assets, dividends derived from such assets, or appreciation on the value of those assets.

Civil recovery can run in parallel with criminal cases based on Congress’s authorisation of the government to seek parallel in rem civil forfeiture actions and criminal prosecutions based upon the same underlying events.

Restitution is the mechanism for compensating victims when recovering criminal proceeds, as governed by the Mandatory Victims Restitution Act (MVRA) and the Victim and Witness Protection Act. Restitution may be ordered for a plethora of financial losses, excluding pain and suffering damages, state or federal taxes, interest, penalties or fines, and expenses for private legal representation, among others. The amount of restitution is determined based on the financial loss information provided by the prosecutor in a case, the investigative agent(s), if any, and the victims prior to sentencing. At sentencing, the judge enters an “Order for Restitution” directing the defendant to reimburse victims for some or all of their losses.

Victims can assert proprietary rights over misappropriated assets separate from what they are provided through restitution. After the government completes forfeiture proceedings against a defendant and publishes notice of the assets being forfeited, third parties (which include victims) can assert their interests in that property through third-party petitions. This process is governed by 21 U.S.C. 853.

DOJ is principally focused on prosecuting healthcare, government contracting, and customs duties fraud. The most prevalent law under which the government has sought to combat fraud is the False Claims Act (FCA), which prohibits the submission of fraudulent claims for payment from the government. Additionally, DOJ is pursuing financial crimes linked to the financing of terrorist groups, cartels, or transnational criminal organisations.

See the US Trends and Developments chapter in this guide.