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A senior U.S. prosecutor unveiled a federal initiative Tuesday that could require chief compliance officers to sign off on plans by their employers to eliminate anti-money laundering lapses or other deficiencies as part of legal settlements and corporate resolutions.

The change in policy aims to give compliance executives a seat at the table and ensure they have the authority, independence and information they need to effectively run their departments, Kenneth Polite, assistant attorney general in the Justice Department’s criminal division, told attendees of the ACAMS AML and Financial Crime Conference in Hollywood, Florida.

“I know the resource challenges that you have … the challenges to accessing data … the relationship challenges … the siloing of your compliance function,” Polite said. “Today’s announcement is not punitive in nature, it is intended to empower you … to ensure that … your company has an ethical and compliance-focused environment.”

Going forward, federal prosecutors will have the discretion, though not the obligation, to task both chief executive officers and chief compliance officers of companies seeking to avoid prosecution, defer prosecution or settle criminal charges with a guilty plea with attesting, in writing, that the compliance programs they oversee are “reasonably designed and implemented.”

“We will also require additional certification language when a company is required to provide annual self-reports on the state of their compliance programs,” Polite said. “We will consider requiring the CEO and the CCO to certify that all compliance reports submitted during the term of the resolution are true, that they are accurate, that they are complete.”

Polite did not provide further details of how the policy may work in practice.

Several AML professionals, however, noted in a subsequent panel at the conference that the plan resembles certification programs that the New York State Department of Financial Services, or DFS, and U.K. Financial Conduct Authority, or FCA, finalized in 2016.

Rule 504, which DFS began enforcing in April 2018, requires senior managers or directors to certify annually that the transaction-monitoring systems their financial institutions employ comply with rules to detect and stop money laundering and sanctions evasion.

Similarly, the FCA’s Senior Managers and Certification Regime, or SMCR, which initially covered banks, broker-dealers and insurers but was extended to cover all regulated institutions in December 2019, holds executives accountable for any violation that occurs in their area of responsibility, including anti-financial crime.

But these types of measures sometimes lead to unintended, undesirable consequences, said Dan Stipano, former deputy chief counsel for the Office of the Comptroller of the Currency.

“I think it’s somewhat unfair,” said Stipano. “If I was advising someone in that position, number one I’d say, “Don’t put pen to paper unless you have absolute certainty that everything you are attesting to is accurate, [because] if you do and something goes wrong, then you have the target on your head.”

The FCA finalized its first SMCR-related enforcement action in May 2018, when the agency fined Barclays CEO Jes Staley £640,000 and ordered him to return £500,000 in bonus money for personally directing the head of the bank’s security unit to attempt to glean the identity of an anonymous whistleblower. The violations also triggered a $15 million fine from DFS.

In a consent order assessed two years later against Industrial Bank of Korea, or IBK, for failing to detect and report attempts by Iran to evade U.S. sanctions, DFS referenced a branch manager’s earlier 504 attestation to the efficacy of the lender’s compliance controls but declined to base any share of the resultant $35 million penalty on that certification.

At the conference Tuesday, Jamal El-Hindi, a former top official at the Treasury Department’s Financial Crimes Enforcement Network and Office of Foreign Assets Control, voiced surprise at Polite’s announcement of the certification program and wanted more details on how the Justice Department would implement the plan.

“It’s well-meaning and other jurisdictions have it … but you have to do it really carefully because you don’t want to chase the best people away from very difficult jobs,” El Hindi, now counsel at the Clifford Chance law firm in Washington, D.C., said.

Polite separately announced Tuesday that the Task Force KleptoCapture, an interagency team his department helped stood up on March 2 to enforce far-reaching sanctions imposed by the U.S. and western allies on Kremlin-linked firms, banks, officials and businessmen in response to Russia’s invasion of Ukraine, would also target due-diligence violations.

“The task force will … [prosecute] those who try to evade KYC [know-your-customer] and AML measures … [or] use cryptocurrency to evade sanctions and launder proceeds of foreign corruption,” he said.

Contact Valentina Pasquali at vpasquali@acams.org