DOJ’s National Fraud Division Outlines New Corporate Fraud Enforcement Priorities and Factors

In April 2026, the US Department of Justice (“DOJ”) created the National Fraud Enforcement Division (the “Division”) to “zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.” Since then, the Division has announced its enforcement priorities and plans for growth and has taken over major oversight portfolios and jurisdictions previously managed by the DOJ’s Criminal Division, including tax section operations and criminal tax enforcement, healthcare fraud, and government procurement fraud.

On October 1, 2026, the Division issued Directive 26-12: Corporate Enforcement in the Fight Against Fraud, via a memorandum by Assistant Attorney General Colin M. McDonald, outlining the Division’s approach to corporate investigations and enforcement actions. It supplements the existing Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP”), and the Justice Manual’s Principles of Federal Prosecution of Business Organizations.

Directive 26-12 Scope

The Directive is the DOJ’s most detailed explanation to date of how the Division will approach corporate investigations and charging decisions, and as such, it is essential reading for companies across a wide range of industries. The Directive’s overall approach is to fight “ongoing and rampant fraud against the United States and American taxpayer dollars” while also establishing a “finely tuned” corporate enforcement program that will “firmly guard against overbroad corporate enforcement” and avoid “interfere[ing] with legitimate business operations.” That balance also bears on individual accountability as the Directive stresses the importance of prosecuting individual wrongdoers, including by focusing on management knowledge or involvement and encouraging disclosures by individuals who participated in misconduct. Its focus is therefore on individual actors at least as much as on corporate liability, and companies should expect scrutiny of individual employees and executives when assessing internal investigations, cooperation decisions, and whether individuals may need separate counsel.

The Directive applies only to matters within the Division’s portfolio. White-collar matters remaining with the Criminal Division—including those related to securities and commodities fraud, FCPA violations, and money laundering—continue to be governed by Criminal Division policies and the Department-wide CEP. Where a matter spans both Divisions or responsibility is uncertain, companies should clarify which component is leading and which policies apply.

Key Takeaways

Creation and Central Role of the Corporate Enforcement Section

The Directive formally establishes the Fraud Division’s Corporate Enforcement Section (CES), whose creation AAG McDonald announced earlier in 2026, as set out in our previous Legal Update, DOJ’s New Fraud Division Issues Plan to Rapidly Grow and to Focus on Five Priority Areas. The CES is charged with leading “the Division’s work to ensure the consistent, fair, and successful prosecution of corporate crime across the Division’s entire fraud portfolio.” Division prosecutors are directed to work closely with the CES at all phases of corporate investigations, from intake through resolution or litigation. Moreover, prosecutors must follow new reporting obligations:

• Within seven days of issuance, prosecutors must report all ongoing corporate investigations to the CES Chief.
• The CES must be promptly notified of any new corporate investigations and major developments in ongoing matters.
• The CES will have primary responsibility for evaluating corporations’ compliance with the terms of corporate criminal resolutions—including implementation of compliance programs, satisfaction of disclosure obligations, and other issues that may arise during an agreement’s term.

The centralization is designed to free prosecuting sections to pursue additional cases while ensuring consistency in corporate resolutions across the Division.

Enumerated Investigation Priorities

The Directive lists four priority areas for Fraud Division corporate investigations:

1. Healthcare fraud, including healthcare fraud schemes, distribution of controlled substances, and violations of the Federal Food, Drug, and Cosmetic Act;
2. Government fraud, including schemes involving the public trust or financial integrity of Americans and markets related to procurement, government contracts, and other government functions;
3. Tax fraud, including significant evasion of internal or external revenue; and
4. Trade fraud, including tariff evasion, importation of goods or services, or forced labor.

Several of the priority areas, including government fraud, tariff evasion, and FDCA violations, previously were identified as priorities for the DOJ’s Criminal Division prior to the creation of the Fraud Division. Thus, it is unsurprising that following the Fraud Division’s appropriation of several areas of federal criminal enforcement from the Criminal Division, these priorities would now guide Fraud Division efforts. Among other things, companies with international supply chains should take particular note of the Division’s emphasis on “trade fraud,” which is the latest reminder of the enforcement scrutiny the DOJ—along with many other components of the Executive Branch—continues to apply to trade-related matters.

10 Factors for Charging and Resolution Decisions

The most consequential aspect of the Directive is the enumeration of 10 specific factors to which prosecutors must give “great weight” when deciding whether to bring charges against a company and when negotiating plea or other agreements with a company:

1. Knowledge of or involvement in the fraud scheme by corporate management;
2. Efforts to conceal fraud from government agencies or auditors or to obstruct a government function or oversight;
3. Conduct that furthers the scheme lasting three years or more;
4. Actions that threaten the safety or security of Americans, including military readiness;
5. Conduct that causes substantial financial hardship to a taxpayer-funded program or government function;
6. Conduct that affects multiple taxpayer-funded programs or government functions;
7. Conduct that affects three or more federal districts;
8. Conduct that results in financial harm to 25 or more victims or $25 million or more in loss;
9. Conduct that involves the exfiltration of American dollars to support foreign adversaries; and
10. Conduct that involves immigration offenses.

The Directive emphasizes that this list is non-exhaustive. The numerical criteria are weighting factors, not minimum thresholds for prosecution or safe harbors for conduct falling below them, and the Directive does not state that the existence of any listed factor automatically precludes a declination or requires a certain form of enforcement action. Indeed, the Directive expressly preserves the existing CEP framework.

The 10 factors should be read together with the Principles of Federal Prosecution of Business Organizations, which establish Department-wide policy. As a component-level AAG memorandum, the Directive does not supersede the Justice Manual; it operates within and alongside that framework and supplements the Justice Manual factors and the CEP by identifying additional considerations that Division prosecutors must weigh heavily. Consistent with that approach, the Directive permits prosecutors to consider any other relevant factors when making charging decisions.

Data-Driven Detection and Rapid Investigation

The Directive signals that the Fraud Division is investing heavily in proactive detection capabilities, and using state-of-the-art technology and data analytics through the National Fraud Detection Center to generate leads and rapidly open investigations. This approach is only the latest expansion of the data-driven approach the DOJ’s Criminal Division historically took to healthcare fraud enforcement and built out into additional areas of white-collar and corporate enforcement, and it indicates that the Fraud Division, which is now the home of the DOJ’s criminal healthcare fraud efforts, intends to follow that Criminal Division precedent to identify potential targets.

Expanded Whistleblower Protections and Incentives

The Directive’s final section is aimed at promoting the disclosure of misconduct. AAG McDonald directs Division leadership to design and implement policies and programs to incentivize credible whistleblower disclosure of fraud, including disclosures by individuals who participated in the misconduct. This approach will add to the numerous whistleblower-style programs that have proliferated throughout the DOJ in recent years (as we discussed in our Legal Updates, New Targets, New Tactics: DOJ Whistleblower Program Focuses on Immigration Enforcement and DOJ Antitrust Division Launches Whistleblower Rewards Program), and it is likely that whatever program is developed by the Fraud Division will closely track aspects of those other programs.

Practical Implications: What Companies Should Do

While the Directive is addressed to Fraud Division prosecutors, its implications for the private sector are significant. It also offers important guidance for in-house legal and compliance functions, who (along with other internal stakeholders) should consider the following steps:

• Reassess risk exposure in priority areas. Companies in the healthcare, government contracting, tax, and trade sectors now potentially face increased scrutiny. The explicit identification of tariff evasion, importation fraud, and forced labor as enforcement priorities warrants particular attention from companies with international supply chains. Compliance programs should be evaluated against these specific priority categories.
• Evaluate self-disclosure posture in light of accelerated detection timelines. The Fraud Division’s investment in data analytics and the National Fraud Detection Center is likely to shorten the window within which companies can expect to discover, evaluate, and potentially self-report internal misconduct for CEP credit before the government identifies the issue independently. Companies should calibrate their identification, investigation, and escalation capabilities and timelines to this new landscape.
• Assess conduct against the “great weight” factors. The 10 enumerated factors provide a new framework for evaluating litigation and enforcement risk. Companies and counsel should analyze existing and potential matters against these criteria—particularly management involvement, duration of conduct, geographic scope, and financial thresholds—to gauge the degree of prosecutorial interest and likely charging posture.
• Quickly identify  potentially relevant individuals. Companies should expect scrutiny of individual employees and executives, particularly where management knowledge or involvement may be relevant. Internal investigations and cooperation strategies should account for potential individual exposure, including the possibility that employees or executives may need separate counsel and that participants in misconduct may have incentives to report it.
• Anticipate more centralized and consistent negotiations. The CES’s role in corporate enforcement across the entire Fraud Division portfolio suggests that companies under investigation or negotiating resolutions may encounter a more standardized approach, much as they did historically with the Criminal Division’s Fraud Section. Companies should expect the CES to be involved at all stages and should be prepared for the Division to take a unified position on resolution terms.
• Prepare for enhanced post-resolution monitoring. Companies currently subject to corporate criminal resolutions that fall within the Fraud Division’s portfolio of responsibilities—including deferred prosecution agreements, non-prosecution agreements, and plea agreements—should expect that the CES will now exercise primary oversight over compliance with the terms of those agreements. Companies should proactively ensure that compliance program enhancements and reporting obligations are on track and well-documented, so that their CES interlocutors can be presented with a coherent and compelling picture of the company’s adherence to its obligations.
• Strengthen internal reporting channels and anti-retaliation programs. The Directive’s emphasis on whistleblower incentives—including encouraging disclosures by individuals who participated in the misconduct—signals that companies should expect more whistleblower reports, potentially from current or former employees with direct knowledge of wrongdoing. Robust internal reporting mechanisms, prompt investigation protocols, and meaningful anti-retaliation policies are more important than ever as tools to head off such reports and given the company the maximum amount of time and space to assess potential misconduct and, if applicable, design an effective strategy for government engagement.

Conclusion

Directive 26-12 is the newly-established Fraud Division’s most detailed outline of how it plans to use its considerable resources to help accomplish its ambitious corporate enforcement agenda. The Directive’s combination of aggressive enforcement rhetoric, specific charging factors, centralized institutional oversight through the CES, data-driven detection capabilities, and a robust pro-whistleblower posture creates a corporate enforcement environment that demands careful attention from any company potentially subject to Fraud Division scrutiny. Companies that take proactive steps now will be best positioned to navigate this evolving landscape. Please contact the authors of this Legal Update for further guidance on these issues.