DOJ’s Fraud Division Corporate Enforcement Directive: What Changes in Practice

On October 1, 2026, Assistant Attorney General Colin M. McDonald, who leads the Department of Justice’s (DOJ) recently created National Fraud Enforcement Division (the “Fraud Division”), issued Directive 26-12: Corporate Enforcement in the Fight Against Fraud (the “Directive” or the “October Memorandum”).¹

The October Memorandum calls for an “aggressive, all-tools approach” to health care, government, tax, and trade fraud; identifies ten factors that will receive “great weight” in charging and resolution decisions; centralizes oversight of corporate matters in the Fraud Division’s Corporate Enforcement Section; and directs the design of new whistleblower incentives. Taken together, these measures signal a more centralized and enforcement-oriented approach to corporate fraud matters, with particular emphasis on public fisc exposure, quantified aggravating factors, and earlier government detection of potential misconduct.

The practical bottom line is that corporate matters will face centralized Corporate Enforcement Section oversight from intake through resolution. Companies should focus on three priorities: (1) mapping exposure to the directive’s priority areas and the 10 “great weight” factors; (2) recalibrating self-disclosure, internal reporting, and anti-retaliation protocols in light of government data analytics and potential whistleblower incentives; and (3) preparing for centralized review by strengthening records and documenting compliance-program implementation and disclosure obligations. This Alert focuses on the October Memorandum and its practical considerations for companies.

I. Overview and Background

As discussed in our prior Alert, the Fraud Division was established in April 2026 by memorandum of then Acting Attorney General Todd Blanche, consolidating the Criminal Division’s Tax Section; Health Care Fraud Unit; and Market, Government, and Consumer Fraud Unit. On August 10, 2026, DOJ renamed the Criminal Division’s Fraud Section the “White Collar and Corporate Enforcement Section,” which retains private fraud (including insider trading and securities fraud), foreign bribery under the FCPA, and FDCA-related offenses.

On August 13, 2026, AAG McDonald issued an inaugural memorandum (the “AAG McDonald Memorandum”) identifying five priorities: public trust and financial integrity; health care; internal revenue; global trade and commerce; and corporate misconduct, but did not identify specific areas of corporate enforcement. The Directive fills that gap.

This development is part of a broader, government-wide focus on fraud. To date, that focus has resulted in the formation of the Task Force to Eliminate Fraud in federal benefit programs, the joint Trade Fraud Task Force between DOJ and the Department of Homeland Security, and the Securities and Exchange Commission’s (SEC) Cross-Border Task Force, focused on foreign companies accessing U.S. capital markets. These initiatives reflect a consistent anti-fraud alignment across the executive branch and regulators.²

II. What the Directive Says and Practical Implications

1. Guiding principles. The October Memorandum directs the Fraud Division to pursue fraud aggressively while guarding against overbroad corporate enforcement. It requires prosecutors to follow the Principles of Federal Prosecution of Business Organizations (JM 9-28.000) and the Corporate Enforcement and Voluntary Self Disclosure Policy (CEP)³ (last updated March 2026) before opening or joining any corporate investigation. The Directive supplements rather than replaces that existing framework: “[i]n all circumstances, Fraud Division prosecutors shall also follow and implement the CEP.”

For companies, this means the CEP and the Justice Manual factors remain the governing framework for self-disclosure, cooperation, and remediation credit, and companies should frame advocacy around those established standards. At the same time, the Directive’s enforcement-oriented tone signals that companies within the Fraud Division’s priority areas should not assume a lighter touch.

2. Corporate Enforcement Section. Fraud Division prosecutors must engage the Corporate Enforcement Section at every phase, from intake through resolution or litigation. To start, Fraud Division prosecutors must report ongoing corporate investigations to the Chief of the Corporate Enforcement Section within seven days of the issuance of the Directive. For companies under investigation by the Fraud Division, this means a second set of DOJ attorneys will be involved in their matter from the start. Companies should expect renewed internal review of their cases, and anticipate that positions on cooperation credit, charging, and resolution terms will be vetted by additional prosecutors, with an eye toward consistency across matters. That may yield more predictable outcomes, but also less room for case-by-case flexibility from an individual trial team.

The Section will also take primary responsibility for evaluating compliance with corporate criminal resolutions, including compliance-program implementation and enhancement and disclosure obligations during the term. The Directive says this centralized post-resolution oversight is intended to free prosecuting sections “to pursue additional individual and corporate cases,” signaling potential for greater case volume. Companies negotiating or operating under a resolution should therefore expect a centralized, potentially more rigorous review of their compliance reporting and should build compliance commitments and reporting practices that will withstand scrutiny from a dedicated corporate enforcement team.⁴

3. Investigative Priorities. The October Memorandum identifies four priority areas: (1) health care fraud, including controlled substances distribution and FDCA violations; (2) public trust and financial integrity, including procurement, government contracts, and other government functions; (3) significant evasion of internal or external revenue; and (4) tariff evasion, importation of goods or services, and forced labor.

Companies that bill federal health care programs, hold government contracts or grants, have significant tax positions, or import goods should expect these areas to receive the bulk of the Fraud Division’s corporate resources, and should prioritize compliance assessments accordingly.

In particular, financial services institutions, payment processors, and fintech companies that facilitate these transaction types—including government-program payments, cross-border fund flows, trade- or tariff-related payments, or transfers that could involve the exfiltration of dollars to foreign adversaries—may also face exposure. They should review their AML/KYC, transaction-monitoring, and sanctions controls against these risks.

4. “Great weight” factors. In charging decisions and plea or agreement negotiations, prosecutors are to give great weight to whether the conduct: (1) involved management knowledge or involvement; (2) involved concealment from agencies or auditors, or obstruction of a government function or oversight; (3) lasted three years or more; (4) threatened the safety or security of Americans, including military readiness; (5) caused substantial financial hardship to a taxpayer-funded program or government function; (6) affected multiple taxpayer-funded programs or functions; (7) affected three or more federal districts; (8) harmed 25 or more victims or caused $25 million or more in loss; (9) involved exfiltration of American dollars to support foreign adversaries; or (10) involved immigration offenses.⁵ These factors may inform prosecutors’ assessment of aggravating circumstances under the CEP, but no listed factor automatically disqualifies a company from CEP benefits; CEP benefits for self-disclosure, cooperation, and remediation remain available where the CEP’s requirements are met.

Companies should expect these factors to shape how prosecutors assess both whether to charge and what resolution to offer. Because several factors are quantified and the thresholds are relatively low, long-running or multi-district issues in billing, contracting, or customs may be treated as aggravated even absent other red flags.

5. Disclosure and whistleblowers. The directive highlights the National Fraud Detection Center and data analytics generating leads “at a rapid pace,” and directs Fraud Division leadership, with law enforcement partners, to design and implement policies and programs incentivizing whistleblowers—including those who participated in the conduct—and to provide public transparency.

Companies should expect government data analysis or insiders to surface potential misconduct before the company does, shrinking the window in which a disclosure can be considered voluntary.

III. How the Directive Departs from the May 2025 Corporate Enforcement Priorities

The Directive largely retains the priority-area approach of the Criminal Division’s May 2025 Corporate Enforcement Priorities, as well as the shared fraud core (health care, procurement, trade and tariffs, and CSA/FDCA violations) and disclaimer against overreach. It narrows the focus to fraud against the public fisc, adds tax and forced labor, converts national security and immigration into charging factors, quantifies aggravators, centralizes oversight, and contemplates whistleblower incentives for culpable insiders. Unlike the May 2025 Corporate Enforcement Priorities, it does not restate company-friendly measures beyond requiring adherence to the Department-wide CEP.

Neither memorandum rescinds the other. Because jurisdiction over many fraud offenses is concurrent, companies should identify early which component is handling a matter; the applicable priorities, policies, and division of labor between the Fraud Division and the Criminal Division’s White Collar and Corporate Enforcement Section may differ.

IV. Key Takeaways and Recommended Steps

Building on the recommendations in our prior Alert, companies should consider the following steps:

• Map priority-area exposure. Test government-payor billing, procurement and contracting, tax positions, customs and tariff classification practices, and forced labor supply-chain risks against the Directive’s priorities.
• Review facilitator controls. Financial services institutions, payment processors, and fintech companies should review AML/KYC, transaction-monitoring, and sanctions controls for government-program payments, cross-border fund flows, trade- or tariff-related payments, and transfers that could involve the exfiltration of dollars to foreign adversaries.
• Inventory open matters and identify the responsible component. Catalog open government inquiries that may now be reported to the Corporate Enforcement Section, and confirm whether the Fraud Division, the Criminal Division, or a U.S. Attorney’s Office is supervising each matter, as that determines which priorities and policies apply.
• Test matters against the 10 “great weight” factors. Quantify duration, districts, victims, and loss, and build a mitigation record on management involvement, auditor and agency communications, remediation, and cooperation.
• Recalibrate self-disclosure readiness. Maintain a framework to make disclosure decisions promptly under the Department-wide CEP, assessing both CEP eligibility and how the conduct measures against the Directive’s factors, while accounting for government data analytics and the 120-day whistleblower-related window. No factor is automatically disqualifying, and CEP benefits remain available where the CEP’s requirements are met. As discussed in our May 2025 Alert, this is something of a double-edged sword: clearer priorities and a common CEP aid predictability, while quantified aggravators and centralized oversight may make resolutions more demanding.
• Strengthen reporting, investigation, and anti-retaliation protocols. Ensure internal channels are trusted, reports—including those from potentially culpable insiders—are escalated and investigated promptly, and reporters are protected.
• Shore up controls, analytics, and records. Confirm communications with auditors and agencies are accurate and complete, use internal analytics to spot anomalies before the government does, and maintain retention practices that support rapid internal investigations.
• Prepare for centralized post-resolution review and monitor implementation. Companies under or negotiating resolutions should document compliance-program implementation and disclosure obligations for Corporate Enforcement Section review and track forthcoming whistleblower programs and guidance allocating matters among DOJ components.