Policy predictions for the incoming US Justice Department – what next?

February 2025  |  SPECIAL REPORT: CORPORATE FRAUD & CORRUPTION

Financier Worldwide Magazine

February 2025 Issue

It is difficult to predict what the US Department of Justice (DOJ) will look like during the next four years under Donald Trump’s second administration. The relative political independence that has existed between the DOJ and the White House since the Watergate era may be upended.

Several indicators, including the Trump Republican Platform or Agenda 47, signal significant structural and leadership changes may be in store for both the Justice Department and the FBI, its lead criminal investigative agency.

Furthermore, any serious effort to slash $2 trillion from federal spending – the ostensible mandate of the new Department of Government Efficiency (DOGE) – would very likely entail significant cuts to the DOJ’s budget. Despite these potentially ground-shifting changes at the top, however, there is reason to believe that the incoming Justice Department’s day to day criminal enforcement efforts may reflect more of a continuation than a radical break from prior administrations, including the Justice Department under the Biden administration.

Shifting priorities, carryover programmes

The second Trump administration’s Justice Department will likely prioritise the prosecution of immigration offences, violent crime, drug trafficking and national security matters. Such was the case during the first Trump administration, and President Trump regularly emphasised these topics on the campaign trail.

In nominating Pam Bondi as attorney general, Trump specifically cited her experience prosecuting violent crimes and drug trafficking offences during her tenure as Florida’s attorney general. Trump’s pick aligns with the Republican Platform, which states that Trump will “shift massive portions” of law enforcement resources to immigration enforcement, with a focus on violent offenders and drug trafficking.

Normally, we might expect to see a corresponding shift away from white-collar enforcement – resources are limited, after all. However, the Biden Justice Department instituted several programmes designed to invigorate federal prosecution of corporate malfeasance, including the Whistleblower Awards Pilot Program, which provides financial incentives to corporate whistleblowers who are not involved in wrongdoing, and the Criminal Division’s Pilot Program on Voluntary Self-Disclosures for Individuals, which extends immunity to individuals involved in corporate wrongdoing who voluntarily report it to the DOJ.

These programmes have already proven to be effective, resulting in a significant uptick in whistleblower complaints regarding corporate crime (over 200 tips since its inception in August 2024), and available witnesses to testify about it.

These and other related initiatives enjoy widespread support within the Justice Department, and several US Attorney’s Offices have adopted their own voluntary self-disclosure programmes for individuals. Consequently, if confirmed, Ms Bondi would likely face significant resistance if she were to try to abandon these initiatives. However, if the programmes are continued, whistleblowers and individual wrongdoers will continue to come forward, and the DOJ will be hard pressed not to devote appropriate resources to building cases around their reports.

Thus, while white-collar crime may not be a top priority in the coming years, the Justice Department will likely continue to bring cases targeting corporate wrongdoing based in part on the momentum carried over from Biden-era programmes.

Cryptocurrency: laissez-faire does not equal lawlessness

Trump’s nomination of Paul Atkins to lead the US Securities and Exchange Commission (SEC) comes on the heels of Agenda 47’s call to end the Biden administration’s ‘crypto crackdown’. The nomination is strong confirmation that the new administration will take a more hands-off regulatory approach to crypto markets.

However, this does not necessarily translate to reduced criminal enforcement. Cryptocurrencies remain unusually vulnerable to fraudulent schemes like pump and dump price manipulation, and many criminal organisations, including Mexican drug cartels, increasingly use digital currencies and tokens to launder money or conduct illicit transactions. Crypto will not survive in any legitimate area of the economy if federal criminal authorities retreat from efforts to protect consumers and keep criminals at bay.

Over the past several years, the Justice Department has brought several significant prosecutions in the crypto space, including the 2024 conviction of Roman Sterlingov, operator of the darknet cryptocurrency ‘mixer’ Bitcoin Fog. For roughly 10 years, Bitcoin Fog was the money laundering service of choice for criminals across the globe and was used to launder over $400m in illicit proceeds derived from narcotics trafficking, fraud and identity theft, computer crimes and child sexual abuse materials.

The Bitcoin Fog case followed the 2023 conviction of Binance and Changpeng Zhao, its chief executive, for knowingly failing to implement effective anti-money laundering and sanctions compliance programmes. These failures allowed terrorists, drug traffickers, cyber criminals and others to turn Binance – then the world’s largest cryptocurrency exchange – into a platform that regularly facilitated some of the largest illicit transactions in the world.

Even the most libertarian of crypto enthusiasts must acknowledge that these types of cases, which impose a base level of lawfulness and stability in an otherwise still largely unregulated market, are essential to the long-term viability of digital currencies.

Thus, while there will likely be a significant reduction in both rulemaking and ‘regulation by enforcement’ (particularly where registration violations are the primary charges) in the crypto space, we expect to see a continuation of vigorous anti-fraud and anti-money laundering prosecutions by the Justice Department, as well as parallel anti-fraud civil enforcement proceedings by the SEC.

Artificial intelligence (AI): lowering the guardrails

While the Biden Justice Department prioritised the prevention of AI-assisted crime, that has not been the topic of Trump campaign or transition discussions. The new president and his team appear much more focused on quickly developing and fully harnessing the power of AI.

Indeed, Trump has already promised to rescind President Biden’s ‘Executive Order on Artificial Intelligence’, which, among other things, emphasised the need to monitor AI’s rapid growth and test its safety. While it is not a precise parallel, we expect to see the main Biden DOJ AI safety initiatives – including updates to the Evaluation of Corporate Compliance Program (ECCP) criteria emphasising the importance of thoughtful AI governance and risk mitigation within companies, as well as proposed sentencing guidelines enhancements for individuals who use AI technology to commit crime – take a backseat to other priorities.

On the other hand, the new Trump administration will likely prioritise keeping advanced AI chips and other sensitive computing technologies, including quantum computing chips, out of the hands of foreign adversaries, particularly China. We therefore expect to see the Justice Department aggressively prosecute any violations of export restrictions.

Relatedly, we expect to see continued robust efforts to prosecute state-sponsored corporate espionage, particularly surrounding AI and other advanced technologies. As an example, a recent report of the General Accountability Office indicated that the Justice Department is exploring whether foreign entities are financing US patent lawsuits to steal US trade secrets and divert the resources of American companies to costly litigation.

Such investigations and prosecutions would likely emanate from the Justice Department’s National Security Division’s Corporate Enforcement programme, for which staffing was increased by Lisa Monaco, deputy attorney general, in 2023.

Conclusion

No matter the enforcement priorities of any given presidential administration, corporate stakeholders are well-advised to maintain robust compliance programmes designed to promptly detect and remediate wrongdoing. Major corporate crime, including fraud, embezzlement, cyber crimes and money laundering, is likely to draw the attention and interest of federal law enforcement regardless of who sits in the White House.

Furthermore, state attorney generals, who operate independently of the US Justice Department and have their own enforcement priorities, carry overlapping – and often even broader – jurisdiction than federal authorities when it comes to many corporate crimes. Finally, companies that lack effective compliance programmes expose themselves to enormous risk separate and apart from government enforcement actions, including theft, cyber incidents, private lawsuits (e.g., shareholder derivative suits) and other costly, reputational-damaging events.                                                                                                                                                            

In short, the best way for companies to navigate shifting political winds and corresponding changes to federal enforcement priorities is to continue to steadily police themselves.

 

Sean Franzblau, Adrienne Gurley and Kan Nawaday are partners at Venable LLP. Mr Franzblau can be contacted on +1 (312) 210 1530 or by email: sjfranzblau@venable.com. Ms Gurley can be contacted on +1 (310) 229 9959 or by email: adgurley@venable.com. Mr Nawaday can be contacted on +1 (212) 370 6240 or by email: kmnawaday@venable.com.

© Financier Worldwide

BY

Sean Franzblau, Adrienne Gurley and Kan Nawaday

Venable LLP

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