DOJ Embraces Data Analytics: A Catalyst for Corporate Compliance Evolution

An article in All Things Compliance highlights Matt Galvin, Counsel, Compliance & Data Analytics at the DOJ, who emphasized the proactive use of data to generate cases related to the Foreign Corrupt Practices Act (FCPA). The DOJ expects companies to adopt a similar data-driven approach to compliance, extending beyond tracking training and policies. The focus is on monitoring third parties throughout the relationship, emphasizing the importance of continuous data analysis.

While due diligence and background checks are crucial, author Tom Fox goes on to note that the real risk of fraud occurs during business transactions with third parties. Companies need to continuously monitor high-risk vendors, contract terms, and relevant data sources. Mapping risks to data sources allows companies to identify and prioritize risky transactions. The accessibility and cost-effectiveness of data analytics make it viable for companies of all sizes, aiding in effective compliance programs, uncovering financial irregularities, and improving efficiency.

Data analytics can be a powerful tool, but challenges include confusion about its application, the need for continuous integration, and balancing factors like sophistication, resource allocation, and potential risks of self-disclosure.

The Department of Justice (DOJ) is now using data analytics to proactively combat white-collar crime, which marks a significant shift in its approach. In response, companies need to adopt a data-driven approach, continuously monitor transactions, and invest in resources and technology to meet the DOJ’s expectations. By doing so, they can improve their compliance programs and mitigate fraud risks. The key is to effectively implement and maintain data analytics capabilities to ensure successful compliance and address potential criticisms associated with major violations.