Compliance tracker 1
Compliance tracker 1

The Importance of Staying Compliant with Global Regulations

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The International Compliance Association (ICA), a globally recognized professional body for compliance professionals, defines compliance as follows:

“Compliance is the function that ensures an organization operates in accordance with the laws, regulations, and standards that apply to its business. It involves identifying and managing the risks of non-compliance and taking steps to mitigate those risks. Compliance professionals play a critical role in promoting ethical behavior, preventing financial crime, and maintaining the integrity and reputation of their organizations.”

To ensure organizations stay compliant and protect their reputation, they need to keep up with changes. They must stay informed about the latest regulations and watch out for updates. They also have to be willing to continually adjust to the changes and ensure other companies they work with, most importantly those handling customer information, are complying with the standard recommendations.

This is important because it serves to verify that businesses are adhering to proper practices and staying abreast of the most current industry standards. Moreover, it plays a pivotal role in safeguarding customer information and upholding the continuity of their trust.

What does Regulatory Compliance mean?

Regulatory compliance refers to the process of adhering to the laws, regulations, and guidelines that are relevant to a specific industry or jurisdiction. It involves ensuring that an organization operates in accordance with all applicable legal requirements, industry standards, and ethical practices.

Few things you need to know about Regulatory Compliance:

  • Governments make laws that organizations need to follow.
  • Every industry has specific regulations that must be adhered to.
  • There are guidelines, and best practices organizations should follow.

Why is Regulatory Compliance important?

Regulatory compliance helps organizations reduce risk and maintain qualifications. When your company is compliant and works with other compliant organizations, you can operate at your best, saving costs and ensuring the safety of customer data. Here are a few statistical data back this claim:

  1. Risk Reduction: According to a survey conducted by PwC, 79% of executives believe that regulatory compliance efforts have effectively reduced their organization’s exposure to risk. Compliance with regulations helps companies identify and mitigate potential risks, thereby enhancing their overall risk management strategies.

2. Cost Savings: Non-compliance can be costly for organizations. A study by the Ponemon Institute found that the average cost of non-compliance with regulations was $14.82 million in 2020. By investing in regulatory compliance measures, companies can avoid penalties, fines, and legal consequences, thus saving significant costs.

This will, in turn, lead to satisfied customers who have a positive experience with your brand.

Benefits of Regulatory Compliance

  • Building trust with customers is crucial. When companies prioritize compliance and show their commitment to it, they earn the trust of their customers. Customers who trust a company are more likely to spend more, make frequent purchases, and spread positive word-of-mouth about their experiences. Customers prefer to engage with brands they can trust, so gaining their trust directly impacts the success of your business.
  • Creating a culture of compliance is important for companies. When compliance is a priority, it sends a clear message to employees about the significance of following regulatory rules. This, in turn, motivates employees to be more conscious of their own compliance efforts and actively participate in compliance procedures.
  • Having clean data is crucial for providing exceptional customer experiences. Unfortunately, many companies fail to recognize this advantage when focusing on compliance. To deliver personalized and effective experiences to customers, it’s important to have reliable data. Compliant companies have established systems to ensure accurate data collection, analysis, and storage. This enables more effective marketing strategies and enhances customer experiences.
  • Compliance enables efficiency and scalability in your operations. How does it work? By being compliant, companies can streamline their processes while ensuring secure and accurate storage of customer data. This allows you to optimize efficiency, provide excellent customer service, and maintain data security. As a result, you can effectively scale your business while delivering exceptional experiences to customers.

What happens when an organization is not compliant?

If your business operates in multiple locations across different countries or states, it’s important to think about how you’ll handle global compliance.

Failing to comply with regulations can have serious repercussions for an international business. Here are some potential consequences to keep in mind.

  • Significant civil fines and penalties, which can have a devastating impact. As an illustration, consider the case of Facebook; they were fined $5 billion in 2018 by the Federal Trade Commission (FTC) in the United States for privacy violations. The fine was a result of Facebook’s failure to adequately protect user data and its mishandling of personal information, which violated an earlier agreement with the FTC. The incident highlighted the importance of compliance with privacy regulations and the severe consequences that non-compliance can have on organizations.
  • Criminal sanctions can be imposed for non-compliance with bribery, money laundering, and fraud laws. In such cases, officers of corporations can face imprisonment and other criminal penalties. It underscores the seriousness of adhering to these laws and the potential consequences for individuals involved in non-compliant activities.
  • Violating contractual obligations is a risk when it comes to compliance. Many business-to-business contracts include compliance requirements, and failing to meet these requirements can be seen as a significant breach of the contract. Consequently, the breach could lead to contract termination, court-ordered injunctions, and the obligation to pay damages.
  • Businesses in various industries often need specific licenses or approvals authorized by regulators (such as financial services licenses). Failing to comply with regulations can lead to these licenses or approvals being taken away. This means the business may no longer have the necessary authorization to operate in that industry.
  • Global compliance failures can seriously harm reputation, which can quickly give your business a negative image in the industry. It’s extremely important to avoid the damaging effects of non-compliance on your reputation, as it can significantly impact your future business opportunities.

How can Organizations achieve global compliance?

Managing your compliance program is crucial to avoiding the potential consequences of non-compliance. Here are some important steps to consider:

  • Integrate compliance into business processes.

Make compliance an integral part of your organization from the start. Instead of developing your organization’s processes first and then checking for compliance, consider compliance requirements as you develop your approach. Prembly helps companies stay compliant by verifying customer identities, assessing risks, meeting regulatory requirements, conducting due diligence, and maintaining proper records. It ensures compliance with laws, prevents fraud and money laundering, and promotes transparency and integrity in customer relationships.

  • Designate accountable personnel.

Ensure that you have a designated person within your organization responsible for compliance, such as a “compliance lead” who may also hold other roles like “chief legal officer” or “head of risk management.” This individual is responsible for staying updated on compliance changes and implementing processes to monitor compliance.

  • Offer continuous compliance training.

Global compliance regulations frequently evolve. Keep your staff informed about their latest obligations by providing regular training programs through online courses or in-person sessions.

  • Establish routine compliance audits.

It is essential for every organization to have a framework for conducting internal audits, which is an independent process to provide assurance within the organization.

As part of these regular compliance audits, global compliance should be included to ensure periodic assessments of the company’s adherence to its compliance obligations.

Stay updated with Global Compliance regulations here.

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