The agreement is expected to be closer to $3 billion, however the estimates are said to be not final.

Volkswagen's looming settlement with the US Department of Justice could exceed $4 billion, sources have told Reuters.

The expected penalty, which has not been finalized yet, is likely to be closer to $3 billion. Unsurprisingly, the sources suggest VW will also be forced to implement a compliance monitor and agree to other reforms.

It is unclear if the DoJ is pushing for a deferred prosecution agreement or will demand a guilty plea for criminal charges associated with the emissions scandal.

Only one employee has been hit with criminal charges in the US, however his ongoing cooperation could lead to prosecutions for other staff that may have been involved in the cheat. DoJ officials are presumably exploring charges for higher-level managers and executives.

VW and the DoJ are said to be scrambling to finalize a criminal settlement before the Obama administration leaves office in two weeks. If a deal is not reached by January 20, the process is expected to face significant delays.