ARS 13-822: Effective programs to prevent and detect violations of law

A. If based on any evidence or information introduced or submitted to the court before sentencing or on any evidence that was previously heard at trial the court finds by a preponderance of the evidence that an enterprise had an effective program to prevent and detect violations of law in effect at the time the offense was committed, the court shall set forth on the record its factual findings and the reasons in support of its findings and shall reduce the fine imposed pursuant to section 13-803, if any, by twenty-five per cent.

B. An effective program to prevent and detect violations of law requires at a minimum that the enterprise does the following:

1. Establish compliance standards and procedures to be followed by its employees and other agents that are reasonably capable of reducing the prospect of violations of law.

2. Assign specific high-level personnel within the enterprise overall responsibility to oversee compliance with the standards and procedures.

3. Use due care not to delegate substantial discretionary authority to individuals whom the enterprise knows, or should know through the exercise of due diligence, have a propensity to engage in illegal activities.

4. Take steps to communicate effectively its standards and procedures to all employees and other agents, including requiring participation in training programs or disseminating publications that explain in a practical manner what is required.

5. Take reasonable steps to achieve compliance with its standards, including the use of monitoring and auditing systems reasonably designed to detect violations of law by its employees and other agents and having in place and publicizing a reporting system where employees and other agents can report violations of law by others within the enterprise without fear of retribution.

6. Consistently enforce the standards through appropriate disciplinary mechanisms, including, as appropriate, discipline of individuals responsible for the failure to detect a violation.

7. After a violation is detected, take all reasonable steps to respond appropriately to the violation and to prevent further similar violations, including any necessary modifications to its program to prevent and detect violations of law.

C. Relevant factors for determining precise actions necessary for an effective program to prevent and detect violations of law include:

1. The size of the enterprise.

2. The likelihood that certain violations may occur because of the nature of the enterprise’s business.

3. The prior history of the enterprise.

D. The failure of an enterprise to incorporate and follow applicable industry practice or the standards called for by any applicable governmental rule weighs against a finding of an effective program to prevent and detect violations of law.

E. An enterprise’s failure to prevent or detect violations of law, by itself, does not mean that the program is not effective if the court finds that the enterprise exercised due diligence in establishing and maintaining its program at the time the acts constituting the offense were committed.

F. This section does not apply if any of the following applies:

1. A high managerial agent of the enterprise, a unit of the enterprise with two hundred or more employees and within which the offense was committed or an individual who is responsible for the administration or enforcement of a program to prevent and detect violations of law participated in, condoned or was wilfully ignorant of the offense. It is a rebuttable presumption that the enterprise did not have an effective program to prevent and detect violations of law if an individual with substantial supervisory authority participates in an offense.

2. After becoming aware of an offense, the enterprise unreasonably delayed reporting the offense to the appropriate governmental authorities. An enterprise shall report an offense within seventy-two hours.

3. The enterprise wilfully obstructed or impeded, attempted to obstruct or impede or aided, abetted or encouraged the obstruction of justice during the investigation, prosecution or sentencing of the offense or, with knowledge of the offense, failed to take reasonable steps to prevent the obstruction or impediment or the attempted obstruction or impediment.

4. If the offense is discovered by the government before disclosure by the enterprise unless, under the circumstances of the offense, no high managerial agent knew or could reasonably have known of the conduct constituting the offense.