The Department of Justice’s newly established National Fraud Enforcement Division (NFED) has issued its most comprehensive public guidance to date for corporate fraud prosecutors, outlining critical factors to be considered when determining whether to pursue charges against a corporation. This directive, detailed in a memo from Assistant Attorney General Colin McDonald, provides significant insight into the division’s enforcement priorities and carries substantial implications for corporate compliance programs nationwide. The memo not only clarifies the criteria for prosecution but also introduces enhanced mechanisms for whistleblower incentives, signaling a more aggressive and proactive approach to combating corporate misconduct.
A New Era of Corporate Enforcement Guidance
In a significant directive issued on October 1st, Assistant Attorney General Colin McDonald of the National Fraud Enforcement Division laid out a framework of ten key factors that prosecutors are to weigh heavily when deciding how to resolve corporate enforcement matters. This guidance represents a pivotal moment, offering unprecedented transparency into the decision-making process within this specialized division. The memo also mandates that all corporate cases within the NFED must be brought before its new Corporate Enforcement Section, tasked with rigorously assessing corporate compliance with resolution terms. Furthermore, the directive mandates the development of incentives for whistleblowers, including those who may have been involved in the alleged misconduct, underscoring a commitment to leveraging insider information to expose corporate malfeasance.
The NFED, a division formed this year largely by consolidating units from the DOJ’s Criminal Division, has drawn attention due to the overlap in its mission with existing enforcement functions. However, McDonald’s memo provides the clearest public articulation yet of the division’s operational strategy and focus areas. Experts consulted by Corporate Compliance Insights (CCI) suggest that while most corporate compliance programs may not require radical overhauls, they should immediately reassess their exposure to enforcement risks, particularly in areas highlighted by the memo and the division’s creation: federal programs, government funding, and international trade.
"For companies with those touchpoints, the memo provides a useful roadmap of the conduct DOJ intends to scrutinize," Carla Baumel, a trial litigator at Robins Kaplan and former Assistant U.S. Attorney in the District of Minnesota, told CCI. She emphasized that the effectiveness of a compliance program hinges on its practical application rather than mere paper representation.
Allen Slaughter, counsel at Robins Kaplan and a former federal prosecutor, echoed this sentiment, stating, "The new memo does not create a new compliance standard; it reinforces the existing message that DOJ will look beyond written policies to how a company identifies, escalates, investigates, and responds to misconduct."
Delving into the Enforcement Priorities
The October directive builds upon priorities initially outlined by McDonald in August, which identified corporate misconduct as one of the division’s five core focus areas. While the August memo offered limited practical detail, the October memo applies a more granular set of factors to corporate cases within the division’s priority sectors. These sectors include healthcare, government programs and procurement, revenue evasion, and trade, with a specific emphasis on issues like forced labor and tariffs.
When assessing how to resolve a corporate case, NFED prosecutors are instructed to give "great weight" to whether management was aware of or involved in alleged schemes. Additionally, they are to consider whether the company actively attempted to conceal misconduct from government agencies or auditors. Other significant factors include threats to national security or American safety, including military readiness; substantial financial harm to taxpayer-funded programs; damage to multiple government programs; and schemes that divert funds to foreign adversaries or involve immigration offenses.
The memo introduces specific quantitative thresholds for certain factors, such as conduct lasting at least three years, affecting at least three federal districts, or impacting at least 25 victims, or causing at least $25 million in losses. However, experts caution against interpreting these figures as definitive "safe harbors."
"Companies should not mistake those numbers for safe harbors," Baumel warned. "The memo expressly describes the factors as non-exhaustive and preserves prosecutorial judgment. A scheme involving $24 million or lasting 35 months does not suddenly become insignificant. The thresholds give companies greater visibility into what DOJ considers significant – and should help compliance teams identify matters that warrant immediate escalation."
Slaughter advised that companies should not limit their risk assessment to specific industries but rather analyze their exposure across various touchpoints. "The practical exercise for compliance teams is… to identify where the company touches federal funds, federal programs, government revenue, or the movement of goods into the United States," he explained. "Where those connections exist, the directive provides a fairly direct indication of both the conduct DOJ is targeting and the circumstances likely to elevate misconduct into a corporate enforcement matter."
Jacqueline Kelly, a partner at Boies Schiller Flexner and former federal prosecutor in the Southern District of New York, noted that the memo’s guidance on prioritizing investigations from the outset, rather than solely on resolution, could lead to a more focused docket for the division. "This can be expected to affect the types of investigations that get opened at all, which legally have a low bar to initiate," Kelly stated. "We can expect this will result in fewer corporate investigations being opened."
The Urgency of Self-Disclosure
While the new memo does not fundamentally alter the rules governing self-disclosure of misconduct, it provides a renewed impetus for companies to ensure their internal mechanisms for identifying and reporting such issues are robust and swift. NFED prosecutors are directed to adhere to the DOJ’s department-wide Corporate Enforcement Policy (CEP), introduced in March. This policy offers potential declinations for companies that voluntarily self-disclose, fully cooperate with investigations, and undertake timely remediation, absent aggravating circumstances.
Two aspects of the memo warrant particular attention: the DOJ’s increasing reliance on data analytics and the directive to establish enhanced whistleblower incentives. The memo highlights that the division is actively generating leads and initiating investigations at a rapid pace, leveraging new resources, technology, and data analytics through its National Fraud Detection Center. This center was established following the NFED’s formal creation in April.
Furthermore, McDonald has instructed division leaders to develop policies and programs designed to encourage whistleblowers to report credible fraud information to the government. This includes provisions for individuals who may have participated in the misconduct, signaling a significant expansion of insider reporting avenues. The specific forms these incentives will take have not yet been detailed.
The combined impact of enhanced data analytics and whistleblower incentives increases the likelihood that the government will discover misconduct independently, potentially before a company has the opportunity to self-disclose. This is a critical consideration under the CEP, as voluntary disclosure credit is typically granted only if the DOJ was unaware of the misconduct. The CEP does allow for a window if an insider reports internally and then to the DOJ, requiring the company to self-report promptly, but no later than 120 days after the internal report. However, if an insider reports directly to the government, this window effectively closes. A review of enforcement actions by CCI this year found that companies have frequently lost voluntary disclosure credit when whistleblowers, media reports, or parallel investigations have alerted the government first.
"The details of that program have not yet been announced, but a company investigating potential misconduct has even less reason to assume it is the only one that knows about it," Baumel observed. Slaughter agreed that additional incentives for reporting "could make the existing race for voluntary-disclosure credit even more difficult."
This dynamic places a premium on companies having well-established internal processes for surfacing problems and making informed decisions about disclosure. "Compliance teams should examine whether significant allegations reach the right decisionmakers quickly and whether they can investigate them efficiently," Baumel advised. "Written policies only go so far. Companies need processes that allow them to investigate serious issues and make informed disclosure decisions quickly." Jenelle Beavers, a managing director with Alvarez & Marsal Disputes and Investigations, recommended that firms revisit their whistleblower programs "to ensure that they are robust, easily accessible to their employees, and that information learned is processed and evaluated in a timely manner."
The Evolving Landscape of DOJ Enforcement
The October 1st memo represents the latest development in a significant organizational reshuffle within the DOJ this year. The White House announced plans for the NFED in January, and Colin McDonald’s confirmation as Assistant Attorney General was secured in March. A DOJ memo in April formally transferred key units from the Criminal Division, including the Health Care Fraud Unit, the Market, Government, and Consumer Fraud Unit, and the Tax Section, into the new division. The NFED was further formalized through regulation in August, and the Criminal Division’s Fraud Section, long the department’s central hub for corporate criminal enforcement, was rebranded as the White Collar and Corporate Enforcement Section.
This restructuring has involved the reallocation of personnel as well as functional responsibilities. McDonald’s August memo indicated that the NFED would comprise approximately 500 attorneys and staff by late August, drawn from various DOJ components and U.S. Attorney’s Offices, with further growth anticipated. In comparison, the Criminal Division’s Fraud Section numbered around 200 lawyers in 2025. Other parts of the Criminal Division have seen a thinning of resources, with some attorneys from its market integrity unit and its Foreign Corrupt Practices Act (FCPA) unit moving to the new division, particularly to healthcare and government fraud units.
The Criminal Division retains its own corporate enforcement unit, leading to a situation where two distinct DOJ groups are now engaged in similar work, including the evaluation of compliance programs and the oversight of corporate resolutions. While the department-wide CEP is intended to promote consistency, Slaughter raised the concern that "a more pressing question may be whether the two corporate-enforcement groups may develop different practical approaches within that common framework."
The implications of the memo’s directive for a seven-day inventory of ongoing corporate investigations remain to be fully seen. Slaughter cautioned against assuming this signals a comprehensive review akin to the pause in FCPA enforcement last year, which resulted in numerous case closures. "The better inference is that DOJ wants immediate visibility into its corporate docket," he stated. "That could result in some cases being accelerated, narrowed, coordinated, redirected, or closed, but it could just as readily result in additional resources being assigned to matters that fit the division’s priorities."
Civil fraud enforcement under the False Claims Act, meanwhile, continues to reside within the DOJ’s Civil Division. An April memo had given the department 120 days to recommend whether to integrate non-criminal functions into the NFED, but no outcome had been announced as of last month. "What we are already seeing is greater coordination across civil and criminal enforcement," Baumel noted. "For now, companies should prepare for parallel proceedings."
Regardless of the ultimate structure and scope of the NFED, the fundamental requirements for compliance teams remain consistent. "The durable elements are familiar: effective internal controls, escalation, investigation, documentation, remediation, and the ability to respond promptly when serious misconduct is identified," Slaughter concluded.
