Running a business within a highly regulated industry can be challenging at times. Facing highly complex, stringent rules and regulations each day requires a dedicated team to manage and enforce them.
Stiff penalties, prosecution, and business loss can become significant pain points in these industries. The benefits of operating this way, however, increase trust and credibility—on top of conforming to established laws.
Today, we’re looking at some of the most important aspects of regulatory compliance and seeking to help you better understand how they affect your financial business.
Check it out below.
Reporting
Reporting is one of the most vital parts of regulatory compliance. Every business will have distinct reporting requirements based on the nature of the business. These might manifest as the Annual Compliance Report (ACR), Corporate Governance Report (GCR), or financial statements.
Automated reporting also helps regulatory compliance software identify wind changes that occur, how companies are monitoring them, and how they’re being enforced, and can highlight any inconsistencies.
It mitigates risk and prevents costly fines or legal issues. Reports also aid in the audit process, which is integral for any regulatory compliance efforts to succeed.
Fraud Protection
You don’t have to be a compliance expert, but it is important that you understand which regulations apply to your industry—and why they’re important for protecting consumers from fraud, theft, and abuse.
The best way for a financial professional to stay up-to-date on regulatory changes is by reading about them regularly. Make sure your team is up to date on what’s happening in the industry, and regulations regarding protecting customers / the business from potential fraud.
Using these resources in conjunction with a strong AI-assisted software tool can help identify potential patterns that could lead to fraud or compromise. It could also tell you where the pain points along your regulatory change management chain are occurring.
A strong tool set will lead to understanding how regulations impact your industry better, why you need to follow them, and inform the best methods for utilizing them throughout your company.
Security
Security is an extensive area in which you must follow regulatory standards and be compliant at all times. Security isn’t just related to computer systems, either. It protects people who use these systems every day from employees to customers.
Regulated Industries like financial or healthcare services have to have strong security controls in place. Personally identifying information can find its way into the wrong hands through cyber attacks. Ransomware and other attack vectors can also lead to the compromise of the data.
This can result in identity theft, fraud, and stolen data being sold on the dark web. Security controls include authentication methods such as multi-factor authentication (MFA), access control lists (ACLs), and encryption techniques such as Transport Layer Security (TLS), or Secure Socket Layer (SSL).
In combination with firewalls and cyber security methods, companies need to follow regulations set forth by the government to safeguard their data and remain compliant all the time.
Payment Processing
Payment processing is a large part of running a company but is doubly important in financial industries. The primary purpose of payment processing is to help exchange money between parties. This happens at the point of sale, through credit card readers, and through online third-party companies.
In payment processing, that company processes the payments that customers make and determines if they are approved or denied. The payment card industry has the PCI standard to follow in order to remain compliant.
It’s just one of many regulations that cover payments. Your own organization should have its own monitoring, enforcement, and plan in place when those regulations change.
Information Management
Information management is a critical aspect of your company’s data and information security. You must keep track of all the information collected, be able to access it when you need it, share it with others who need access to it and store it securely.
Your regulatory compliance team will help ensure that your financial institution has proper procedures in place for information management. There is a lot to keep track of throughout the process, but it can mean the difference between staying compliant or facing terrible consequences in the long run.
Employing powerful software to handle information management and regulatory change management at your organization is the best way to ensure you’re always in compliance and that your customers (and your own) data remains safe at all times.
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