The regulatory landscape is rapidly evolving, placing new demands on businesses and their compliance teams. Compliance management solutions have the power to help compliance officers stay one step ahead of emerging regulations—Lauren St. Armand, Head of Marketing at StarCompliance, is on hand to show us how.
The modern business environment is complex, to say the least. In addition to rapid technological innovation, heightened customer expectations, globalized operations, and supply chain disruption, organizations also face an ever-growing web of regulations, laws, and industry standards. Adhering to these various compliance requirements is not only a legal obligation, but essential to maintaining the trust of customers, business partners, and stakeholders.
In light of these conditions, organizations need to develop robust compliance management strategies and leverage the right technology to close compliance gaps, safeguard their reputations, maintain stakeholder confidence, and avoid costly penalties.
Compliance management refers to the collective policies, protocols, and processes an organization uses to ensure compliance with the various laws, regulations, and standards that govern its industry. Proper compliance management typically involves:
Organizations are increasingly turning to digital compliance management solutions to automate many of these responsibilities, which enables them to reassign employees to tasks that require human reasoning and planning and to optimize their compliance efforts. The various compliance management solutions on the market today are collectively referred to as regtech, short for “regulatory technology.”
From delivering seamless online experiences to their customers to automating core business processes to enhance efficiency, organizations across all industries—including financial services—have gone digital. While digitization creates opportunities for innovation and advancement, it also introduces a degree of risk around data privacy and security. Regulatory authorities and legislators have responded accordingly, drafting new laws, regulations, and standards in the interest of protecting consumers and fair trade.
There are real consequences for organizations that fail to comply with these laws and regulations, not only in the form of financial or civil penalties, but also in reputational damage.
Compliance management—and compliance management solutions—play a vital role in helping organizations protect their reputations and their finances. This makes it easier for organizations to adhere to legal and ethical standards, ensure transparency and accountability, and enhance overall corporate governance.
There are several rules and regulations organizations should be aware of when developing a compliance management strategy or implementing compliance management solutions:
The FCPA is a United States federal law enacted in 1977 to combat bribery and corruption in international business transactions. The FCPA prohibits U.S. companies, foreign companies listed on the U.S. stock exchanges, and individuals from offering, promising, or providing bribes or other improper payments to foreign officials, political parties, or candidates in order to obtain or retain business advantages.
The FCPA also imposes accounting and record-keeping requirements to ensure transparency and accuracy in financial reporting. The law aims to promote fair and ethical business practices while protecting the integrity of international commerce.
The Bribery Act 2010—also known as the United Kingdom Bribery Act—is comprehensive anti-corruption legislation enacted by Parliament in 2010. Designed to prevent bribery and corrupt practices both within the UK and internationally, the Act outlines the following four offenses:
The Bribery Act broadly applies to individuals, businesses, and public officials and establishes strict liability, meaning there is no requirement to prove corrupt intent. The Act has far-reaching implications, encouraging companies to implement robust anti-bribery policies and procedures and promoting ethical business conduct.
Gifts and entertainment regulations collectively refer to an array of laws, rules, and regulations that govern the giving and receiving of gifts, hospitality, and other forms of entertainment in business relationships. These regulations aim to ensure ethical conduct, prevent conflicts of interest, and maintain transparency in business dealings.
Such regulations typically set limits on the value and frequency of gifts and entertainment, define acceptable practices, and outline reporting requirements. For example:
In the U.S., the Securities and Exchange Commission (SEC) regulates insider trading, the practice of buying or selling stocks or other securities on material non-public information (MNPI). The reason for this is that insider trading has the potential to affect the price of the security, offering an unfair advantage to those with access to that information. For reference, “insiders'' include directors, executives, or anyone who holds more than 10% of a company’s securities.
It’s important to note that not all insider trading is illegal. If an insider files the appropriate paperwork with the SEC—specifically, SEC Form 3, SEC Form 4, and SEC Form 5—any trading of company shares is then considered an insider transaction, rather than illegal insider trading. If, however, an insider does not complete these forms—or, if they share insider information with an outside party, who then acts on that information—they could be subject to civil or criminal penalties and fines of up to $5 million.
Although illegal insider trading has serious consequences for individual violators, it can also negatively impact the organizations they work for. Insider trading can damage a company’s reputation, undermine investor confidence, and discourage non-insiders from participating in the market, which can make it difficult for organizations to raise capital.
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The U.S. government enforces “pay-to-play” laws—laws that regulate political donations made by those who seek or hold government contracts—at both the state and federal levels. These laws aim to prevent political corruption and the undue influence of money in the political process, thereby ensuring fair and transparent government practices, promoting a level playing field for businesses, and maintaining public trust in the integrity of the political system.
Although pay-to-play laws primarily affect organizations in the financial services sector, it’s important that all companies be aware of them and factor them into their compliance management. Language and requirements for these laws may vary by jurisdiction, so it’s imperative that organizations familiarize themselves with their state’s rules and limits.
Nothing worth having comes easy—that’s just as true for compliance management as anything else. Though organizations need a compliance management strategy in place, creating that strategy can be challenging, given the inherent complexity of both the regulatory landscape and business operations.
Some common obstacles organizations face around compliance management include:
Organizations across all industries are increasingly turning to compliance software to solve their most pressing compliance management challenges. With the right compliance management solutions, companies can:
In addition to these benefits, third-party compliance management solutions are routinely updated to reflect new regulations and advances in cybersecurity, to improve user experiences, and to facilitate mobile connectivity—all without taking a toll on a company’s internal IT team.
There are many compliance management software solutions on the market today. To find the right one for your organization, consider the following:
Want to know even more about how to improve your compliance management strategy, or what to look for in a compliance management solution? Contact the experts at StarCompliance today for more information.
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