The Department of Justice’s National Fraud Enforcement Division is intensifying its crackdown on financial crime. On October 7, 2026, Assistant Attorney General Colin M. McDonald issued a new directive marking a significant operational shift for the agency. The memorandum instructs prosecutors to attack fraud schemes using the division’s tax, securities fraud, consumer fraud, and cybercrime authorities. According to the department, the Government Accountability Office estimates annual federal fraud losses range from $233 billion to $521 billion. This guidance makes clear the division is focused on rooting out fraud and using every available mechanism to do so.
A Broad Strategy
The new policy outlines a thorough approach to combating fraud. This strategy includes attacking fraud from all angles, developing proactive cooperating witnesses, pursuing corporate enforcement, addressing arrest, detention, and violations of pretrial release, and sentencing advocacy. The memorandum also directs prosecutors to look beyond common fraud charges like mail and wire fraud. Instead, they must fully dismantle the fraud schemes and networks they investigate and maximize recoveries and secure justice.
As part of this effort, the division will examine tax offenses. Individuals who profit from fraud schemes often fail to report their income accurately or pay the appropriate taxes. Prosecutors are also directed to investigate consumer fraud and cybercrime to identify residual harm and analyze whether additional charges can be brought against wrongdoers.
The directive aims to “take the profit out of fraud” through the early seizure of fraud proceeds. Prosecutors are directed to collaborate with the division’s Asset Recovery Section to achieve this. An aggressive pre- and post-indictment enforcement strategy is emphasized. This involves obtaining restraining orders or seizure letters to freeze assets held in banks and cryptocurrency exchanges shortly after they are stolen.
The division will also use warrants and in rem forfeiture proceedings to seize criminal proceeds. These proceeds include funds held in accounts, cryptocurrency wallets, securities, and other financial instruments before criminal charges are initiated. Additionally, prosecutors may seize websites, domains, online accounts, domestic and international satellite and cellular terminals and related US-based service accounts, and other digital property used to commit fraud or conceal fraud proceeds.
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To prevent the dissipation of assets, the memorandum authorizes civil actions. These actions can obtain restraining orders prohibiting the withdrawal, transfer, removal, dissipation, or disposal of criminal proceeds or property of equivalent value. Civil actions may also obtain injunctions against government fraud, banking law violations, and healthcare offenses. Furthermore, prosecutors can seek prejudgment remedies, including the attachment or garnishment of assets, sequestration of income, and the appointment of receivers for any offense. The approach signals a shift toward aggressive asset recovery.
Cooperating witnesses remain a central part of this strategy. Assistant Attorney General McDonald reminded prosecutors that fraudsters willing to cooperate will not get a free pass. However, prosecutors will inform the court of a cooperating witness’s “substantial assistance” to an investigation where appropriate. This practice helps retain a meaningful incentive for witnesses to assist early in investigations. The directive also reaffirms the Fraud Division’s scrutiny of healthcare, government programs and procurement, tax, and trade. Companies operating in these areas should remain vigilant.
Assessing Industry Risks
Compliance programs must be robust. They should be designed to detect and raise reports. This process helps address potential criminal conduct before it escalates. The Fraud Division is committed to using every tool available. It seeks to hold wrongdoers accountable. Companies operating in the identified areas must remain vigilant. They should monitor how interagency cooperation functions in practice. This vigilance helps in preparing for potential legal challenges. Corporate enforcement remains a top priority for the Fraud Division, as detailed in Directive 26-12, which Bracewell reported on earlier this month.
Companies with questions about the memorandum’s implications for their operations, compliance programs, or potential enforcement exposure should consider engaging counsel to assess risk, evaluate existing controls, and develop an appropriate response strategy. Bracewell’s government enforcement and investigations team is available to help companies handle these developments and prepare for increased scrutiny in these areas.[1]
