(Reuters) -The U.S. Justice Department is expected to allow planemaker Boeing to escape criminal prosecution for violating the terms of a 2021 settlement related to the fatal 737 MAX crashes in 2018 and 2019, the New York Times reported on Friday.

The DOJ plans to offer Boeing a deferred prosecution agreement, which requires the company to install a federal monitor to oversee safety improvements, the New York Times reported, citing people familiar with the situation.

The U.S. government is expected to extend its settlement offer to the planemaker before the end of the month, the report said. Boeing was not immediately available for comment, and a spokesperson for the DOJ declined to comment.

In May, the DOJ said Boeing failed to "design, implement, and enforce a compliance and ethics program" to prevent violations of U.S. fraud laws. Boeing in January 2021 agreed with the DOJ to pay $2.5 billion to resolve a criminal investigation into the company's conduct surrounding the fatal crashes.

The agreement included money to compensate victims' relatives and required Boeing to overhaul its compliance practices.

Had the DOJ wanted, it could have charged the company criminally, which could have affected the iconic planemaker's ability to secure government contracts, according to a Reuters review of prosecutors' actions following findings that companies violated other similar agreements.

But after an intense internal debate, department officials appear to have concluded that prosecuting Boeing would be too legally risky, according to the New York Times report on Friday.

Any DOJ move to not prosecute Boeing will bring some relief to the beleaguered planemaker, which has been engulfed in a crisis since the Jan. 5 accident involving a 737 MAX 9 jet. Boeing shares have slumped over 30% this year.

Relatives of the victims of the fatal 737 MAX crashes asked the Justice Department on Wednesday to seek a fine against the planemaker of nearly $25 billion and move forward with a criminal prosecution.

Senator Richard Blumenthal, who chairs the Senate's Permanent Subcommittee on Investigations and held a hearing with Boeing CEO Dave Calhoun on Tuesday, said there "is near overwhelming evidence in my view as a former prosecutor that prosecution should be pursued."

(Reporting by Abhijith Ganapavaram in Bengaluru and Chris Prentice in New York; Editing by Anil D'Silva)