Imagine a chess player who doesn't know the rules of the game or a music teacher who can’t read notation. It's unlikely they'll succeed, is it?
Running a business, likewise, starts with understanding various rules and regulations. To be able to work, companies need to keep up with laws and adhere to industry standards. This practice is called compliance.
In this post, we'll explore the various types of compliance that your business needs to be aware of and why it’s important.
What Is Corporate Compliance?
Corporate compliance is an essential part of any business.
It means making sure that a company follows all applicable laws and government requests, as well as its own policies and procedures. Compliance can be divided into external and internal accordingly.
Here are several reasons why management teams should pay attention to compliance:
- To reduce risks of penalties and legal liability.
- To protect business reputation.
- To provide a better understanding of responsibilities and code of conduct among the staff.
- To promote transparency and ethical operations within a company.
Having a strong corporate compliance program in place is helpful for businesses regardless of their size and industry type.
What Types of Compliance Exist?
All kinds of business operations are regulated. Organisations need to adhere to environmental standards, financial reporting requirements and data protection laws.
In addition to state requirements, your company may introduce internal rules for itself. You may have policies about how team members should handle confidential information or emergencies.
Here are some compliance areas businesses should pay attention to.
This type of compliance covers all state regulations and guidelines imposed on businesses.
Depending on their industry and jurisdiction, organisations have a different set of obligations to follow.
Some countries have stricter laws than others. Smaller companies deal with a single legislative system, whereas larger organisations must comply with relevant laws in each country they operate. Industries like finance, IT, and healthcare often deal with complex regulatory frameworks.
To ensure regulatory compliance companies must monitor legislation regularly and implement policies for their teams.
According to PwC, 64% of UK businesses have experienced economic or financial crime in the past two years. This is a significant increase from 56% in 2020.
This concern is not limited to one country, however. Financial crimes became an international issue that many governments are focusing on.
Financial compliance is critical to preventing fraudulent activity.
It includes the steps businesses take to stay in line with financial transaction laws. Anti-money laundering (AML) and know-your-customer (KYC) checks are common procedures in financial compliance.
Several organisations try to prevent illegal actions, such as corruption, fraud, terrorism financing and money laundering. The Financial Action Task Force (FATF) is a major international organisation dealing with the issue. It provides recommendations for state authorities.
Each country, in turn, has regulators which oversee the financial market. In the UK, this function is carried out by the Financial Conduct Authority (FCA).
IT and data compliance
In today's digital age, businesses increasingly depend on technology and data to operate.
Even small entrepreneurs collect information from their clients, not to mention Big Tech. Thus, companies need to ensure that personal data is collected, stored and secured properly. This means implementing adequate safety protocols, updating the equipment and keeping up with legislative changes.
Here are major laws for companies operating in the UK:
- General Data Protection Regulation (EU GDPR).
- UK General Data Protection Regulation (UK GDPR) and the Data Protection Act (DPA) 2018.
- The Privacy and Electronic Communications (EC Directive) Regulations 2003.
Information Commissioner’s Office (ICO) is the main body that ensures data protection for UK citizens.
Violations are extremely costly. Companies that infringe on the UK GDPR risk facing penalties of up to £17.5 million or 4% of their annual global turnover.
It should be emphasised that pressure on businesses will likely increase in the coming years as customers become more worried about privacy issues and governments tighten legislation.
Health and safety compliance
In the area of health and safety, compliance entails adhering to the relevant standards and regulations. This is essential for any business because it helps to prevent accidents, injuries, or even fatalities at the workplace.
As a business owner, it is your responsibility to ensure the safety of your staff. Team members need to be trained on how to act in case of emergency and how to use Personal Protective Equipment (PPE).
Within the UK, the obligations of employers are stipulated by several documents. Main legislation includes the Health and Safety at Work Act of 1974 (HSWA) and the Management of Health and Safety at Work Regulations of 1999.
With adequate safety measures in place, your company can avoid many risks, such as:
- Financial losses (fines or insurance compensations).
- Negative publicity following the incident.
- Legal actions from employees or trade unions.
- The outflow of personnel and difficulties in finding new hires.
Compliance Certification Types
To prove that your business has met compliance standards you need to obtain certification. It will demonstrate to your partners and clients that you follow all applicable laws for your industry.
Below we’ll discuss the most popular types of compliance certifications.
Certified Information Systems Security Professional (CISSP)
CISSP is an internationally-recognised certification that validates professional knowledge and experience in the field of information security.
It’s designed to test the individual’s understanding of key principles and concepts, such as risk management, network security, software development security, access management, and more.
Earning this certification demonstrates a commitment to staying up-to-date with the latest trends and provides employers with assurance that their team has the necessary skills to protect company data.
Certified Information Privacy Professional (CIPP)
CIPP certification is for professionals who work in the field of data privacy.
Simply put, it helps to prove that one understands data privacy laws across the globe and can apply them accordingly.
Individuals who obtain certification have the knowledge and expertise to protect personal data. They can confidently advise on data privacy issues in any industry. This skill set is currently in high demand in the job market.
Certified Compliance Manager (CRCM)
The CRCM certification is held in high esteem within the financial industry as it is challenging to obtain.
The American Bankers' Association grants this certification only to those professionals who have a deep understanding of US economic regulations and can ensure their company follows all the rules.
Beginners in the industry can’t get this credential. To qualify, one should have at least six years in the last ten years, or three years of experience coupled with relevant coursework taken at the ABA. All candidates must agree to a code of ethics statement before taking the test. The exam itself takes four hours and consists of 200 questions.
CRCM experts become valuable parts of the team in matters such as risk management, and different types of compliance audits and procedures.
Improve Your Compliance With LIGA UNITED
Compliance can be a time-consuming and complex process. Fortunately, there are software solutions that can help your business with this task.
LIGA UNITED is a solution that streamlines various types of compliance for your team. With our advanced features, you can reduce the risk of human error and make sure that your business stays up-to-date with regulatory changes.
- Be sure your company is regulatory compliant. Search and analyse legislation relevant to your industry.
- Be sure your company is financially compliant. Verify information about companies for your KYC/ALM procedures. Find business links, analyse financial activity, and check the presence in sanction lists and negative media mentions.
- Be sure your clients and partners remain safe to work with. Monitor changes regarding companies to ensure you can provide financial services to them or sign contracts.
Nowadays, compliance is more than just following rules. In a highly-competitive and ever-changing business world, clients, partners and potential employees look for companies with a solid reputation. Thus, the stakes are higher than ever and businesses need to constantly reconsider their approaches and find new tools to automate the process.
Compliance is a necessity for businesses to grow and succeed. There are many legislative areas companies need to pay attention to. Some notable lines of work include regulations relevant to business, health and safety measures, data protection and financial rules. Using the software may come in handy in all of those tasks.
Depending on the industry and the size, businesses may have different priorities. Nowadays, compliance is especially relevant in matters of finance, IT, health and safety.
Compliance is essential for businesses to protect their finances, reputation and business relationships. It also provides for a healthier and more transparent work environment, where team members understand their responsibilities and follow an ethical code of conduct.