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United States: Department of Justice announces new corporate compliance directives for AI along with increased penalties for AI-related misconduct

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In brief

On 7 March 2024 at the American Bar Association’s 39th National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco announced several new initiatives the Department of Justice (DOJ) is implementing to address concerns around the use of AI in federal criminal activity along with potential corporate compliance failures that might facilitate the misuse of AI.

In depth

This latest speech follows Monaco’s February 2024 remarks at the University of Oxford where she noted that “new technology is a double-edged sword, but AI may be the sharpest blade yet”. Monaco noted that DOJ will increase its focus on AI through a new “Justice AI” initiative. The initiative will seek to study, among other policy and technological issues brought about by AI, the effective use of AI in the justice system. DOJ has already used AI internally to help trace the source of drugs, triage public tips submitted to government agencies, and synthesize large volumes of evidence in various types of cases.

On the other side of the coin, Monaco’s remarks illustrated the concrete steps DOJ is taking to address potential harm that powerful AI technologies can present if placed in the wrong hands or deployed without appropriate safeguards. To this end, Monaco introduced updated corporate compliance guidance for companies developing, selling, or using AI tools. The updated guidance, to be incorporated as part of the DOJ’s Evaluation of Corporate Compliance Programs, now requires corporate compliance programs to assess, and mitigate, risks posed by corporate use and/or sale of AI and other disruptive technologies. Companies whose corporate compliance programs do not sufficiently account for and allay these risks will face a much more difficult path to corporate criminal resolution, which could require enhanced compliance measures, an independent monitor, and higher penalties.

Monaco’s latest statements in San Francisco stress DOJ’s escalating concerns about the potential for criminal exploitation of rapidly-developing technologies including AI. “Where AI is deliberately misused to make a white-collar crime significantly more serious,” Monaco said, “our prosecutors will be seeking stiffer sentences — for individuals and corporate defendants alike”. In addition to lobbying the Sentencing Commission for a new sentencing enhancement to apply when AI and other so-called “disruptive technology” is used in the commission of federal crimes, the government could seek to apply sentencing enhancements for the criminal use of AI under the Sophisticated Means Enhancement in the existing Sentencing Guidelines. “Sophisticated Means” include crimes that are “especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense” and can result in increasing the offense level and recommended sentencing range. 

In the same speech, Monaco also announced a new DOJ whistleblower program designed to sweeten rewards for self- reporting corporate misconduct through a system of financial incentives. This new initiative will begin with a 90-day sprint to develop and implement a pilot program scheduled to begin later this year. The program will offer new monetary incentives for non-culpable employees to report crimes such as financial misconduct, overseas bribery, and other corporate fraud. Individuals who come forward can even get paid as part of the recovery from the criminal case. In conjunction with the DOJ’s voluntary self-disclosure program, the whistleblower program is designed to assist in the Department’s fight against white-collar crime.

Consistent with Monaco’s remarks underscoring the DOJ’s focus on targeting the criminal use of disruptive technologies, the US Attorney’s Office for the Southern District of New York recently charged two men for participating in a conspiracy to hack fantasy sports accounts and betting websites and then selling the users’ credit card and other personal private information on the dark web. As alleged in the federal complaint, the defendants used AI- generated images to advertise their services. Similarly, the US Attorney’s Office for the Northern District of California on Wednesday unsealed charges against an individual in the San Francisco Bay Area accused of having taken AI-related trade secrets by virtue of his position at his company and attempting to use them to start a competing business in the People’s Republic of China.

Key takeaways

  • The Justice Department’s statements emphasize growing urgency for companies to review and revise their corporate compliance programs specifically to assess and mitigate potential risks posed by the development, sale, and/or use of AI technologies.
  • Government enforcers will assess the efficacy of a company’s compliance program ability to mitigate significant AI risks. Companies with businesses that deploy AI-enabled tools should reassess corporate their compliance programs’ ability to prevent employees, customers, vendors, and business partners from misusing this cutting-edge technology.
  • Companies using AI technology, particularly in sales and procurement or with other external-facing functions that impact pricing or bids, should take additional cautions to safeguard company sensitive information.
  • In consultation with counsel, companies should consider potential improvements to their compliance programs to strengthen internal protocols to assess and manage AI risks, including in product development and deployment, as well as in training employees on the responsible use of AI applications.

Conclusion

As Monaco’s remarks confirm, AI remains a top enforcement priority for DOJ. Companies introducing AI products into the market or utilizing AI tools should be diligent in establishing sophisticated guardrails to prevent the technology from being misused. Effective compliance programs focused on AI risks should continue to be a top priority given this increasing scrutiny.

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Author

Jess is a technology investigations partner practicing at the forefront of government enforcement in the technology industry. Jess leads Baker McKenzie's investigations and compliance practice on the West Coast.
For more than two decades, Jess has defended companies and individuals in government investigations and conducted internal investigations involving cutting-edge technology issues including AI, cybersecurity, and alleged misuse of all kinds of data. Jess has defended companies and individuals across the Asia Pacific region since the first DOJ Antitrust cartel investigations in 2003, and has a deep understanding of cultural issues impacting investigations in that region and across the globe.
Jess has been recognized by Chambers & Partners, The Legal 500, and Global Investigations Review for internal investigations and defense in cases involving White Collar Crime & Government Investigations.

Author

Ashley Eickhof is a senior associate in the Firm's North America Antitrust & Competition Practice Group. Ashley is an experienced litigator and has tried criminal cases in federal court. Prior to joining Baker McKenzie, Ashley worked at another large international law firm in the Antitrust and Competition Practice Group. Before that, Ashley began her career as a federal prosecutor for the Antitrust Division of the US Department of Justice.

Author

Halli Spraggins is an associate in Baker McKenzie's Antitrust & Competition Practice Group in Washington, DC. Prior to joining Baker McKenzie, Halli was an associate at a disputes firm where she focused her practice on complex litigation, antitrust enforcement and class actions.

Author

Byron was an Assistant United States Attorney at the US Attorney's Office for the Central District of California where he prosecuted a wide variety of federal crimes including white collar crimes and COVID-19 related fraud schemes, coordinated multi-agency investigations, and conducted federal criminal jury trials. As a federal prosecutor, Byron also briefed and argued appeals before the United States Court of Appeals for the Ninth Circuit.
Before joining the US Attorney's Office, Byron was an attorney at a global law firm where he practiced antitrust and competition law.

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