US Moves to Weaken Corporate Oversight Could See Monitorships Scrapped

The US government’s retreat from strict corporate regulation now looks set to include ending the use of monitors who oversee companies’ conduct after resolving criminal cases. The shift could have immediate effects, including for TD Bank, where the Department of Justice (DoJ) installed a monitor after the Canadian institution admitted to laundering hundreds of millions of dollars for drug traffickers.

Monitorships require corporations to hire an external firm—often a law firm or consultancy—to have broad access to internal records and employees. These monitors investigate potential violations, ensure compliance with plea agreements, and report findings directly to the courts or government agencies.

Meanwhile, crypto giant Binance has pushed for its own monitorship to be lifted, appealing to the US Treasury Department. Binance argued that maintaining two monitors was “unprecedented, inefficient, and overburdensome — and not something envisaged when we negotiated the resolutions with the government agencies.” The request comes after Binance’s founder, Changpeng Zhao, was jailed following the company's admission of money laundering and sanctions violations. The crypto exchange agreed to pay $4.3 billion in penalties to US authorities after pleading guilty to allowing financial flows linked to terrorists, child abusers, and cybercriminals. Among the sanctions breaches were nearly $900 million worth of transactions between users in the US and Iran.

According to insiders cited by the Financial Times, the move to relax monitorship requirements is part of a broader loosening of corporate enforcement policies by the DoJ, even for companies that had already accepted monitors as part of settlement deals. The Department of Justice declined to comment when contacted.

Monitorships became a more common feature of corporate settlements following the landmark prosecutions of WorldCom and Enron, which shook corporate America in the early 2000s.

Defense contractor Raytheon could also benefit from the regulatory pullback. Although Raytheon agreed to a three-year monitorship in October when it paid over $950 million to defer prosecution on charges of foreign bribery and overbilling the Pentagon, the arrangement has not yet been implemented. Prosecutors are reportedly rethinking whether to proceed with it, according to the Financial Times. Raytheon did not respond to a request for comment.

In an internal email last month, Glencore chief executive Gary Nagle wrote: “The DOJ are of the view that the monitorships are no longer necessary as they are confident that the Company will continue with these efforts and meet its obligations under the resolutions.” Glencore, the Swiss commodity trading house, pleaded guilty to foreign bribery charges in 2022 but was allowed by the DoJ to end its monitorship 15 months ahead of schedule.

“If you have a company that’s been engaged in severe and pervasive misconduct, the risk is that they won’t fix it. And you won’t know they didn’t fix it, and that they could do it again,” Duke University law professor Veronica Root Martinez told the Financial Times.

Monitorships have long been a lucrative practice for law firms, particularly those employing former prosecutors, offering high fees and reliable revenue streams. For corporate defendants, however, the process has often been seen as intrusive, expensive, and burdensome.

The weakening of monitorships is just the latest development in a series of rollbacks on US financial crime and corporate crime enforcement. One of President Trump’s first acts in office was to curb enforcement of the Foreign Corrupt Practices Act (FCPA), which prohibits bribery of foreign officials. Monitorships had previously been a frequent feature in the resolution of FCPA cases.

The administration also embraced the cryptocurrency sector and dismantled key cryptocurrency and sanctions enforcement task forces, further signaling a retreat from aggressive financial crime regulation.

By fLEXI tEAM