The U.S. Department of Justice announced last month the enforcement priorities and organizational structure of its new National Fraud Enforcement Division, which was established in the first quarter of the year. The announcement is the clearest indication to date of how the fraud division will operate and where it intends to direct its resources.

Approximately 500 attorneys and staff, including specialized prosecutors, investigators, corporate enforcement personnel, asset recovery professionals, and data scientists, will make up the division. DOJ also intends to deploy division personnel nationwide, in coordination with U.S. Attorneys’ Offices and other federal agencies, and to expand the division over the next two years. These investments signal an intent to become a substantial and enduring component of the federal white collar enforcement framework.

The fraud division has identified five principal enforcement priorities:

1. Public trust and financial integrity, including government procurement and benefits fraud.
    
2. Global trade and commerce, including customs and trade fraud.
    
3. Healthcare fraud.
    
4. Tax fraud.
    
5. Corporate misconduct.

These priorities reflect a broader effort to centralize fraud enforcement and pursue conduct that may implicate several regulatory and criminal regimes at once.

A single course of conduct, for example, could raise questions concerning customs declarations, government contracting representations, improper payments, sanctions restrictions, tax obligations, and money laundering. By bringing prosecutors, investigators, data scientists, corporate enforcement specialists, and asset recovery resources together, the DOJ is creating an enforcement structure capable of examining such conduct across traditional agency and subject-matter boundaries.

Of particular importance to companies engaged in cross-border commerce is the fraud division’s emphasis on global trade and customs enforcement. Through its Global Trade & Commerce Enforcement Section and the cross-agency Trade Fraud Task Force, the division will pursue a coordinated criminal enforcement strategy concerning customs and trade violations in core areas such as country-of-origin fraud, undervaluation of imported goods, illicit transfers of goods, sanctions evasion, and supply chains involving forced labor. When relevant, the fraud division also will work alongside the DOJ’s Civil Division, which may pursue tariff evasion and other alleged fraud against the federal government under the False Claims Act. The result is a developing enforcement environment in which inaccurate import documentation or deficient supply-chain controls may create administrative, civil, and criminal exposure at the same time.

The elevation of global trade and commerce to a principal enforcement priority should prompt businesses to reconsider where customs compliance sits within their broader risk-management framework. DOJ’s new structure places core import and tariff issues squarely within its white collar enforcement program. The practical concern is no longer limited to whether an importer paid the correct duty. Prosecutors may also examine whether:

• Inaccurate information was knowingly supplied.
   
• An intermediary helped obscure a product’s origin or value.
   
• The underlying transaction circumvented sanctions or import restrictions.
   
• The company benefited from representations made to the government.

DOJ’s reliance on data analytics may materially increase successful investigations and enforcement. The National Fraud Detection Center, which sits within the new fraud division, will analyze information from government programs and cross-agency data systems to identify potential fraud. Companies operating in data-rich regulatory environments, including government contracting, customs, and international trade, should therefore anticipate that investigations may originate from anomalies detected in information already held by the government.

Import entries, country-of-origin declarations, valuation records, shipping information, procurement certifications, and other regulatory submissions may be examined together rather than in isolation. A discrepancy that once might have appeared to be a discrete customs issue could instead become the starting point for a broader investigation.

The fraud division investigations will analyze not only the company’s compliance procedures, but also business partners and other third parties in order to uncover potential violations. International supply chains frequently depend on customs brokers, freight forwarders, sourcing agents, distributors, and logistics providers, some of whom communicate directly with foreign government officials. Efforts to expedite clearance, alter classifications, conceal a product’s origin, avoid duties, or circumvent sanctions may be considered fraudulent activity. Companies should not assume that a customs investigation will remain confined to import compliance. The same facts may be scrutinized under anti-bribery, sanctions, money laundering, procurement fraud, and tax laws.

For businesses engaged in global commerce, these developments require a more integrated compliance strategy. Companies should assess whether their customs, sanctions, anti-corruption, tax, procurement, and supply-chain functions share information effectively and do not operate in separate compliance silos. Internal reviews should test whether the same product, transaction, supplier, and third party are described consistently across customs filings, purchasing records, invoices, contracts, sanctions-screening systems, and financial records.

Companies also should examine whether responsibility for classification, valuation, origin, and forced-labor diligence is clearly assigned and whether internal escalation procedures are capable of identifying recurring discrepancies rather than addressing each error as an isolated event.

The fraud division’s focus on corporate misconduct adds urgency to those efforts. DOJ has reiterated that companies may receive credit for voluntary self-disclosure, cooperation, and remediation, but the increased use of government data may shorten the period during which a company can identify and evaluate potential misconduct before authorities do. Businesses should ensure that customs-related complaints, audit findings, broker communications, and unusual data patterns are escalated promptly to personnel capable of assessing the company’s broader legal exposure. When potential misconduct is identified, the investigation should be scoped broadly enough to determine whether the issue extends beyond a technical customs error and implicates other regulatory or criminal concerns.

For more information, please contact us or your regular Parker Poe contact. Click here to subscribe to our latest alerts and insights.