Put simply, regulatory compliance implies that a company is aware of and in conformity with all rules and regulations pertinent to its operations and industry. These rules can be implemented at the regional, state, federal, or global scales.
Regulatory compliance (meeting government regulations) is distinct from other elements of corporate compliance (such as following internal policies and rules). While both are necessary to guarantee honesty, security, and moral conduct in enterprises, it is beneficial to know the distinctions between them.
Financial regulations primarily affect financial institutions and FinTech organizations and focus on how sensitive and private information is kept to safeguard consumer and client data against data breaches.
While data protection requirements do not cover the whole breadth of compliance in the financial services business, they are an essential element. According to Verizon's 2020 Data Breach Investigations Report, 3950 verified data breaches occurred that year. Sensitive information was collected in roughly 60% of the incidents — nearly twice as many as the preceding year.
Financial firms that are not adequately regulated risk compromising the financial system's safety, harming customers, and jeopardizing the economy's outlook. This is why effective financial regulation is crucial: to put regulations in place to prevent things from going wrong and to secure the greater financial system and customers if incidents occur.
Compliance, which many regards as the bane of their performance, requires every financial organization to set rules and implement processes to minimize frauds, enhance accountability, and ensure fair marketplace competitiveness, among other things. We have witnessed the emergence and use of regulatory compliance solutions over the last decade.
With tech-based regulatory compliance solutions, businesses may automate processes and raise compliance standards throughout the company while cutting expenses associated with compliance. According to a Duff & Phelps report, compliance costs in the financial industry will more than double by 2022.
That being said, although many businesses view regulatory compliance as an impediment to success, many forward-thinking companies recognize it as a resource that can provide them with a competitive advantage. Though 100% compliance may require extra time, attention, and scrutiny, these businesses recognize that assuming a passive attitude is not a viable option.
Here are some strategies your business could adopt to help avoid making these mistakes and ensure greater compliance.
Your staff must understand how changing regulations might influence – and even interrupt – day-to-day operations. More importantly, employees must understand what they can do in their jobs to help the business comply and prepare for an audit.
Develop a communication strategy for distributing the most recent information while providing the training your personnel needs to remain updated on regulations.
Knowing where your team or department falls on the compliance spectrum allows you to develop interventions to assure future compliance. Conduct a regular "internal audit" in your department to help uncover noncompliance concerns – before auditors do.
These evaluations guarantee that you are better prepared if subjected to a regulatory compliance audit. By receiving insights into the issue, you can answer any queries.
Build a solid working connection with your compliance manager or team and regular compliance communication with internal auditors.
The 'ideal' compliance model is one in which everyone collaborates, and no one individual is held accountable for compliance. This is only possible with efficient partnerships between departments and the supply chain and clearly defined duties from a centralized authority.
Instead of having a patchwork of separate systems to handle compliance, use Cotribute solutions to handle the heavy lifting for you. They streamline everything, helping to expedite procedures, avoid duplication, and ease compliance.
Compliance rules protect clients from any adverse repercussions of a company's activities, help the business preserve its status, and assist top management and authority in averting criminal liability. The finance sector, for example, is controlled by legislation such as the Dodd-Frank Act and the Sarbanes-Oxley Act (SOX).
Further, the Health Insurance Portability and Accountability Act (HIPAA) was enacted to protect the data and interests of people with health insurance by governing the preservation and protection of their medical data and information.
Notable regulatory bodies include
The FTC (Federal Trade Commission): An impartial organization that implements non-criminal antitrust rules to maintain a competitive market and safeguard consumers from deceptive commercial practices.
The Occupational Health & Safety Administration (OSHA): This organization governs working conditions by developing and implementing rules to ensure a safe and healthy workplace.
The General Data Protection Regulation (GDPR) comprises requirements that apply to companies that collect data from EU individuals, regardless of where the entity is located.
To maintain market integrity, countries outside the EU in Europe, such as the United Kingdom, have their own regulatory compliance frameworks and bodies, such as the Financial Conduct Authority (FCA).
In the financial services sector, compliance with regulatory requirements is crucial. Banks usually provide client information, event logs, and other vital data. The financial institution ought to have the material prepared for submission whenever necessary since the regulator may occasionally have an urgent need for the information. A digital banking solution can quickly download and report the required information.
Cotribute is a digital solution providing numerous advantages to banks and credit unions. By offering a central location for account opening and loan applications with the associated documents from customers, the platform assists financial institutions in improving the ease and efficiency of their consumers. Schedule a demo today if you're searching for a reliable, responsive, and secure digital banking platform.