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NEW YORK — The U.S. Department of Justice's approach to crediting firms and individuals for voluntarily disclosing misconduct is proving effective, despite not being widely used, a senior federal prosecutor in New York told a gathering of compliance officers on Thursday.

Alixandra Smith, deputy chief of the criminal division in the U.S. Attorney's Office for the Eastern District of New York, highlighted during a Society of Corporate Compliance & Ethics conference that various DOJ components had voluntary self-disclosure policies even before the agency introduced its broader corporate criminal enforcement policy last year.

"The fact that the policies have been around and now they've been expanded shows that they do tend to work," Smith said. "The more transparent we can be about what our process is and what the benefits are and how it's going to work makes it more effective."

Smith acknowledged that there aren't "tons" of voluntary self-disclosures coming in, but consistency in how the DOJ handles these disclosures can build trust and encourage more companies to self-report.

Last year, following Deputy Attorney General Lisa Monaco's directive, the DOJ unveiled a voluntary self-disclosure policy for corporate criminal enforcement across all U.S. attorney's offices. This policy incentivizes corporations to report individual misconduct by offering significant reductions in fines and the possibility of avoiding guilty pleas for timely self-reporting.

According to the DOJ directive, a voluntary self-disclosure must occur before an imminent threat of the misconduct being exposed or a government investigation begins. For companies that meet the criteria, fully cooperate, and implement appropriate remediation, U.S. attorney's offices will not seek a guilty plea from the corporation, barring aggravating factors. In such cases, options like deferred prosecution agreements and nonprosecution agreements are available.

Even companies with aggravating factors, such as widespread misconduct or involvement of senior executives, may avoid a guilty plea. Voluntary self-reporting can also lead to no monetary penalty, subject to the discretion of the U.S. attorney's office. If penalties are imposed, they will not exceed 50% below the low end of the advisory sentencing guidelines range.

In scenarios where a guilty plea is deemed necessary due to the seriousness of aggravating factors, a self-disclosing corporation can still receive a significant reduction in fines, ranging from at least 50% to as much as 75% off the low end of the guidelines fine range.

Smith noted that voluntary disclosures are more common in cases involving a single actor who isn't a senior leader at a firm, as companies see such conduct as more isolated. "The harder cases — and where we don't get voluntary self-disclosures — are rooted in a cultural issue," she said. "And part of the culture is not addressing the issue."

She expressed hope that the evolution of self-disclosure policies and the transparency prosecutors must provide regarding the conduct and factors under review will encourage more disclosures. "They can feel comfortable that they know upfront what they're getting into," Smith added.