Regulatory compliance is essential for a company to act legally. If legal compliance standards are not met, companies can expect fines and penalties – if this activity is allowed to continue. Examples of regulatory compliance laws and regulations include the Payment Card Industry Data Security Standard (PCI DSS), health insurance portability and accountability act (HIPAA), federal information security management act (FISMA), Sarbanes-Oxley Act (SOX), EU General Data Protection Regulation (GDPR), and California Consumer Privacy Act (CCPA). In addition, there is a growing body of software that can help you streamline, simplify, and automate your regulatory compliance procedures. The technology available from companies like Contractbook helps reduce the complexity of regulatory compliance by providing contract templates and automation to help you define the requirements your business needs to meet, based on your industry and business needs. Companies that do not comply with mandatory regulatory compliance practices face many potential impacts, such as the requirement to participate in remediation programs that include on-site compliance audits and inspections by the relevant regulatory body. Non-compliant organizations are typically subject to fines and penalties. Brand reputation can also be damaged by companies that experience repeated – or particularly egregious – compliance violations. Legal governance refers to the establishment, execution and interpretation of the processes and rules established by the company`s legal departments to ensure the proper functioning of the legal department and the company. [3] Some industries are more regulated than others. For example, the financial services sector is subject to regulatory compliance mandates designed to protect the public and investors from harmful business practices. Energy suppliers are subject to regulations for safety and environmental protection purposes.
Government agencies are required to comply with compliance regulations that require employee equality and ethical behavior. Multinational companies need to know the regulatory compliance rules of each country in which they operate. For example, the GDPR came into effect in 2018 and applies to all data produced by EU citizens, regardless of whether the company collecting the data is based in the EU or not. The GDPR also applies to all persons whose data is stored in the EU, whether or not they are EU citizens. A big part of regulatory compliance is having a robust process of continuous monitoring of a company to ensure that it remains compliant with the law. In practice, this means that audits of departments take place again and again, in addition to keeping the company informed of any legislative changes that affect them. In fact, if your business turns out to be so severely negligent in terms of legal compliance procedures, you may find that your trading license has been permanently revoked. Essentially, you may be prohibited from running your business again and being charged by the authorities – perhaps the biggest legal risk of all, as you could end up with a criminal record.
Legal compliance/compliance can then be defined as a set of processes and procedures within a particular program to ensure compliance with government regulations and laws. Technology can help achieve regulatory compliance. Legal compliance programs such as CLARA offer modern workflow systems that always automatically match the current legal situation. This greatly facilitates compliance with the law, as the efforts required to train employees in changes to the law and the standardization of processes are eliminated. The necessary documents are requested by the program, transactions can be verified by clicking on their legality and reports for the authorities can be generated automatically. Entity management is important, but it also targets entity governance, where compliance teams have enough strategic oversight of the company`s structure to predict the downstream impact of changes in regulations and laws. Strong corporate governance relies on regular assessment of regulatory compliance. Compliance officers are responsible for compliance procedures, systems, and policies to ensure that the company does business within legal parameters. Regulatory compliance isn`t as complicated as you might think. However, as an entrepreneur, you need to manage it properly. You can use this article to formulate a compliance policy.
By following compliance regulations, you can stay on the safe side of the law and regulators. Company policies are considered legally complete if they do not contain gaps in the legal sense.