Voluntary Disclosure Programs, by US Agency (and their delightful contradictions)
Overview of Programs
Several major enforcement agencies have introduced or updated their self-disclosure policies in recent years:
- DOJ Corporate Enforcement Policy (CEP) (FCPA): a published Department of Justice (DOJ) policy that encourages companies to report misconduct early, offering potential non-prosecution or a reduction in penalties of up to 75% for general corporate offenses (e.g., fraud, bribery, FCPA violations). These incentives were reaffirmed and clarified in a May 12, 2025 memorandum from the Head of the DOJ Criminal Division, which emphasized a presumption of declination for companies that self-disclose, cooperate, and remediate. It also streamlined criteria, narrowed monitor use, and formalized expectations for “near miss” (when a company mostly qualifies for declination but just misses the mark and still gets credit for good behavior) cases.
- NSD Policy (Sanctions, Export Controls): a policy under the DOJ’s National Security Division (NSD) offering a presumption of declination or non-prosecution if companies (1) voluntarily disclose criminal violations of U.S. export control or sanctions laws, (2) fully cooperate, and (3) remediate.
- Individual Pilot Program (Individual): a program offering non-prosecution to individuals who disclose their own corporate misconduct, fully cooperate and materially assist in investigations.
- SEC Framework: a policy from the Securities and Exchange Commission (SEC) that weighs voluntary reporting and cooperation when determining appropriate penalties.
- CFTC Guidance: a Commodities Futures Trading Commission (CFTC) advisory, including a “mitigation credit matrix” that can reduce penalties up to 55% based on the timing and thoroughness of the disclosure.
These frameworks incentive companies to report potential or actual violations before any whistleblower or regulatory action. The goal: to incentivize transparency and early cooperations by offering reduced penalties when companies come forward of their own accord.
For example, the DOJ’s April 2025 declination of prosecution against Universities Space Research Association (USRA) illustrates declinations availability even when criminal misconduct has occurred if the company acts quickly. USRA disclosed its employee’s export violations within just days of discovery, cooperated fully, disciplined those responsible, and remediated.
While not offering a guaranteed outcome, most programs offer similar reduced penalties or favorable treatment based on a discretionary assessment of factors. (Of course, aggravating factors – such as senior management involvement, repeated violations, or concealment – can weigh against favorable treatment.)
Whistleblower Incentives
In parallel, many agencies offer whistleblower “bounty” programs, including:
- DOJ Pilot Program: a program offering substantial financial rewards in criminal enforcement cases (which we’ve already covered in detail for you here!)
- SEC Program: a program offering individuals an award up to 30% of monetary sanctions collected in enforcement actions where the total exceeds $ 1 million.
- CFTC Program: a program which, to date, has paid out nearly US$400 million to whistleblowers.
A Most Delicious Contradiction
Corporate voluntary disclosure programs coexist with whistleblower programs that financially reward individuals for reporting violations…creating a built-in tension. On one hand, regulators want companies to investigate and report violations on their own. On the other, their incentives actively encouraging employees to bypass internal processes and take their concerns to the agencies directly (with the potential promise of a payout).
While companies are being pushed to disclose quickly, internal investigations take time. A whistleblower, by contrast, does not need to verify every fact through an investigation before reporting. A company therefore has to weigh (a) a comprehensive and fair investigation to substantiate allegations against (b) the potential for that responsible investigation to undermine its ability to claim self-disclosure credit.
Additionally, voluntary disclosure in the US could lead to admissions of culpability in other jurisdictions without leniency levers.
The Solution
In today’s enforcement landscape, timing is everything. The key is preparation:
- A well-functioning internal reporting and escalation system.
- A procedure for rapid and reasonable investigations.
- Early discussions as to whether to disclose material concerns.
- Prompt remediation, if required.
- Fulsome documentation of material investigations.
Voluntary disclosure programs, both domestically and abroad, offer clear benefits, but the decision to report is rarely simple. Companies must weigh the completeness of their internal investigations, the likelihood of whistleblower reporting, and specific policies in play across all relevant jurisdictions. While recent developments in the US and the UK suggest a strong incentivizing of corporate reporting and cooperation, none offers complete certainty. Timing, strategy, and preparation remain crucial!
The Wallenstein Law Group can assist you with each of these elements. Contact us today!
Addendum
On April 24, 2025, the UK Serious Fraud Office (SFO) issued updated guidance encouraging companies to self-report suspected corporate wrongdoing. This guidance states that prompt self-reporting and full cooperation will typically lead to the SFO allowing the company to enter Deferred Prosecution Agreement (DPA) negotiations.
Note: as in the US, this strong incentive also falls short of a guarantee. The SFO retains significant discretion and emphasizes that each case will depend on its own facts. (For instance, self-reporting without full cooperation will not be enough for DPA negotiations, but full cooperation without initial self-reporting could still lead to DPA negotiations.)
| Authority | Factors that Influence Leniency | Incentives for Disclosure | Consequences for Non-Disclosure Violation |
| DOJ (General Corporate) | Voluntariness, timeliness, and completeness of disclosureFull cooperation Timely and appropriate remediationAbsence of aggravating factors | Up to 50% penalty reduction Presumption of declination if no aggravating factorsNo imposition of an independent compliance monitorPresumption of declination (even with aggravating factors) in cases of mergers & acquisitions if misconduct is discovered through due diligence | Criminal prosecution Fines Reputational harm Potential monitorshipno credit for cooperation |
| DOJ (NSD Export Control & Sanctions Policy) | Voluntariness and timeliness (before government inquiry) of disclosureFull cooperation Timely and effective remediation Absence of aggravating factors | Presumption of non-prosecution agreement or full declination if all criteria are metAvoidance of criminal chargesPreservation of eligibility for government contractsNo fine in some cases | Criminal chargesSteep finesLoss of export privilegesReputational harm |
| DOJ – Individual | Voluntariness and timeliness of disclosure Substantial and credible cooperation Completeness of information provided | Non-prosecution for individualsAvoidance of criminal chargesOpportunity for cooperation | Criminal chargesNo cooperation benefits |
| SEC Framework | Voluntariness and timeliness of disclosureFull cooperation and extent to which the cooperation advances enforcement goalsQuality of remediationSeverity of misconduct | Up to 30% reduction in monetary penaltiesCredit for cooperation factored into settlement and charging decisions (discretionary)Potential reduced sanctionsDoes not offer declinations – penalties are civil only | Full civil penalties |
| CFTC Program | Voluntariness, timeliness and completeness of disclosureScope and value of cooperationTimely and effective remediation Severity of misconduct Prior violations or compliance history | Penalty reduction up to 55% under “mitigation credit matrix”Greater credit for earlier, more comprehensive disclosuresRecognition of cooperation in enforcement orders | Maximum enforcement penaltiesNo cooperation creditReputational harm |
