White Collar: Regulators Make The Shift From Carrots To Sticks

There is a global arms race for data and technology, including artificial intelligence, and that has been leading the U.S. government to look at cybersecurity and sanctions through the lens of national security," says Jennie Wang VonCannon, a partner at Crowell & Moring. "Because of these high stakes, regulators are building more 'sticks' rather than 'carrots' into enforcement regimes—and making it clear that companies need to take these things very seriously. And more rigorous enforcement generally leads to waves of litigation."

That shift can be seen in the Justice Department's launch of its Civil Cyber-Fraud Initiative in October 2021. "For too long, companies have chosen silence under the mistaken belief that it is less risky to hide a breach than to bring it forward and to report it," DOJ Deputy Attorney General Lisa Monaco said at the time. "Well, that changes today."