The U.S. Department of Justice’s newly established National Fraud Enforcement Division (NFED) has unveiled its most comprehensive public directive to date, providing corporate fraud prosecutors with a detailed framework for evaluating potential charges against corporations. This significant memo, issued on October 1st, outlines ten key factors that prosecutors are to heavily consider when making decisions about initiating criminal proceedings, negotiating plea agreements, or otherwise resolving corporate enforcement matters. Coinciding with this guidance, the NFED is also mandating that all corporate cases be routed through its dedicated Corporate Enforcement Section for review, and is actively developing new incentives for whistleblowers, signaling a robust and evolving approach to corporate accountability.
A New Era of Corporate Enforcement Guidance
The October 1st directive from Colin McDonald, Assistant Attorney General for the NFED, represents a pivotal moment in the department’s strategy for prosecuting corporate misconduct. This memo provides unprecedented transparency into the decision-making process of a division that was largely reconstituted this year from units previously housed within the DOJ’s Criminal Division. The creation of the NFED itself, which consolidated various fraud enforcement functions, had previously raised questions due to the perceived overlap with existing departmental responsibilities. However, the clarity provided by this directive aims to address those concerns by offering a unified and structured approach.
Experts in corporate compliance and white-collar defense suggest that while the memo does not fundamentally alter existing compliance standards, it significantly sharpens the focus on specific areas of corporate vulnerability. Companies are advised to re-evaluate their exposure to enforcement risks, particularly in sectors involving federal programs, government funding, and international trade. The directive underscores the importance of robust, well-functioning compliance programs that are not merely theoretical but demonstrably effective in identifying, escalating, investigating, and responding to misconduct.
"For companies with those touchpoints, the memo provides a useful roadmap of the conduct DOJ intends to scrutinize," stated Carla Baumel, a trial litigator at Robins Kaplan and former Assistant U.S. Attorney for the District of Minnesota, in a written interview. This sentiment is echoed by Allen Slaughter, a partner at Robins Kaplan and former federal prosecutor, who emphasized that "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."
Fleshing Out the Enforcement Priorities
The October directive builds upon priorities previously articulated by Assistant Attorney General McDonald in August, when he identified corporate misconduct as one of the division’s five core focus areas. While the earlier announcement offered limited practical detail, the recent memo provides specific criteria that prosecutors are to weigh heavily. These criteria are particularly relevant to the NFED’s priority areas, which include healthcare, government programs and procurement, revenue evasion, and international trade, encompassing issues such as forced labor and tariffs.
When determining how to resolve a corporate case, NFED prosecutors are instructed to give "great weight" to several critical factors. These include whether senior management was aware of or involved in alleged schemes, and whether the company actively attempted to conceal misconduct from government agencies or auditors. Additional factors that will significantly influence prosecutorial decisions include whether the alleged conduct posed threats to American safety or security, including military readiness; caused substantial financial hardship to taxpayer-funded programs; harmed multiple government programs; or involved schemes that channeled funds to foreign adversaries or constituted immigration offenses.
The memo also introduces specific quantitative benchmarks, although these are presented as guidance rather than rigid thresholds. Conduct that has persisted for at least three years, spanned at least three federal districts, or impacted at least 25 victims or resulted in at least $25 million in losses, will be considered particularly significant. However, legal experts caution against viewing these numbers as "safe harbors."
"Companies should not mistake those numbers for safe harbors," Baumel advised. "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."
The application of these priorities is not confined to specific industries. Slaughter emphasizes that companies should interpret the memo through the lens of their operational exposure rather than their sector alone. "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, suggests that the memo’s emphasis on prioritizing investigations from the outset could lead to a more focused corporate 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 observed. "We can expect this will result in fewer corporate investigations being opened."
The Accelerating Race to Disclose
While the October directive does not introduce new rules for self-disclosure of corporate misconduct, it provides a compelling incentive for companies to ensure their internal mechanisms for identifying and reporting wrongdoing are both swift and effective. The NFED is committed to adhering 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 timely remediate any misconduct, provided no aggravating circumstances are present.
Two particular aspects of the NFED’s strategy warrant heightened attention from corporate compliance professionals: the division’s advanced use of data analytics and its explicit directive to create enhanced whistleblower incentives.
The memo highlights that the NFED is already actively generating leads and initiating corporate and individual investigations "at a rapid pace." This is facilitated by new resources, cutting-edge technology, and sophisticated data analytics capabilities housed within its National Fraud Detection Center. This center was established by the DOJ in April concurrently with the NFED’s formation.
Furthermore, Assistant Attorney General McDonald has instructed division leaders to develop policies and programs designed to encourage whistleblowers to report credible fraud information to the government. Crucially, these incentives are intended to extend even to individuals who may have participated in the alleged misconduct. The specific forms these new whistleblower incentives will take have not yet been publicly detailed.
The increasing reliance on data analytics and the impending expansion of whistleblower incentives collectively raise the likelihood that the government will learn about corporate misconduct before a company self-reports. This dynamic is critical in the context of the CEP. Under the policy, voluntary disclosure credits are generally only awarded if the DOJ was not already aware of the misconduct. A notable exception allows for credit if a company self-reports promptly after an internal report, but an insider reporting directly to the government circumvents this window entirely. A review of enforcement actions earlier this year by CCI indicated that companies have frequently forfeited voluntary disclosure credit because a whistleblower, a media report, or a parallel investigation had already alerted the authorities.
"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 noted. Slaughter concurred, stating that additional incentives to report "could make the existing race for voluntary-disclosure credit even more difficult."
This heightened environment places a premium on a company’s internal systems for identifying and addressing problems. The ability to efficiently surface issues and make informed decisions about disclosure before external parties do is paramount. "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, further stressed the importance of revisiting 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."
A Sweeping Reorganization and Evolving Landscape
The October 1st memo is the latest development in a significant, rapid reorganization within the DOJ’s fraud enforcement apparatus this year. The White House first announced plans for the NFED in January. Colin McDonald’s nomination to lead the division was confirmed by the Senate in March via a narrow partisan vote. In April, a DOJ memo officially transferred the Criminal Division’s Health Care Fraud Unit, its Market, Government and Consumer Fraud Unit, and its Tax Section into the newly established division. The formal regulatory establishment of the NFED occurred in August, at which time the Criminal Division’s Fraud Section, long the central hub for corporate criminal enforcement, was renamed the White Collar and Corporate Enforcement Section.
This reshuffling has involved not only the relocation of specific functions but also the transfer of personnel. 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. Attorneys’ Offices, with plans for further growth. In contrast, the Criminal Division’s former Fraud Section numbered around 200 lawyers in 2025. The redistribution has led to a thinning of resources in some areas of the Criminal Division. For instance, its market integrity unit saw attorneys move to the new division, and its Foreign Corrupt Practices Act (FCPA) unit, which had already shrunk from 32 prosecutors in 2024 to 22 in 2025, experienced further attrition as some lawyers were reassigned to healthcare and government fraud units now within the NFED.
Adding complexity to the organizational structure, the Criminal Division retains its own corporate enforcement unit. This means the DOJ now possesses two distinct entities engaged in similar work, including the evaluation of corporate compliance programs and the oversight of corporate resolutions. Allen Slaughter acknowledged the potential for overlap, stating that while the department-wide CEP should mitigate inconsistencies, "a more pressing question may be whether the two corporate-enforcement groups may develop different practical approaches within that common framework."
The directive for the NFED to conduct a seven-day inventory of ongoing corporate investigations also raises questions. Slaughter cautioned against drawing parallels to past DOJ reviews, such as the pause in FCPA enforcement that led to the closure of numerous cases. "The better inference is that DOJ wants immediate visibility into its corporate docket," he suggested. "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, primarily under the False Claims Act, remains within the DOJ’s Civil Division. While the April memo provided a 120-day window for recommendations on potentially folding non-criminal functions into the NFED, no outcome had been announced as of last month. "What we are already seeing is greater coordination across civil and criminal enforcement," Baumel observed. "For now, companies should prepare for parallel proceedings."
Despite the evolving departmental structure, the fundamental tenets of effective corporate compliance remain constant. "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. The NFED’s new guidance and organizational enhancements signal a renewed and intensified commitment by the Department of Justice to holding corporations accountable for fraudulent and illegal activities.
