Regulatory compliance is essential in business adherence to laws. You sure don’t want to pay fines and receive legal punishments, don’t you?
Let us delve deeper into this topic. In this article we will discuss these points:
- What is regulatory compliance?
- Why is regulatory compliance important to your business?
- What are the examples of regulatory compliance laws and regulations?
Defining Regulatory Compliance
Regulatory compliance refers to an organization’s coherence. Specifically with the laws, regulations, guidelines, and specifications. These are all related to business processes.
The word ‘compliance’ implies the thought of obedience. Or we can also say ‘submission’. This is with the existing business practices to the laws and regulations relevant to it.
However, take note that regulatory compliance is different from corporate compliance. Consider their difference through the following details.
- Regulatory compliance more likely relates to government or federal laws. All connected to businesses. Examples of these laws will be further enumerated in this article.
- On the other hand, corporate compliance is more internal. This relates to the internal rules or policies of the corporation or business itself. These are the privacy rules set by the corporation. Thus, this is apart from the compliance from the state.
The Importance Of Adherence
Simply put, if you violate a policy, you will be penalized. The same is the case with regulatory compliance violations. Not submitting to rules set by the state shall lead to legal punishments. Furthermore, this may include federal fines.
Because of this, proper management of this matter is now in high regard. This ranges from all sizes of organizations.
Furthermore, this has led to the designating of a Corporate, Chief, and Regulatory Compliance Officer. Not to mention the Compliance Manager positions.
The main objective of these positions is to ensure compliance within the organization. Thus, they will hire personnel solely focused on the job. In turn, these employees shall make sure that the organization is in ‘compliance’. In compliance even with the complexity of legal mandates. And with the applicable laws related to the business’ practices.
These compliance processes, therefore, help the business with its goals. On the other hand, audit reports are also generated. These reports prove a business’ compliance. As a result, this can help with better marketing. Relating to the business to its customers.
For instance, audit reports such as SOC 1, SOC 2, and SOC 3 reports. (SOC stands for Service Organization Control). These reports give evidence that the company is in line with SOX.
Thus, being transparent in this regard fosters trust. As mentioned, this can build better client relationships. Most especially with the organization’s business practices. This further assures them that your company is adherent. Thus, creating the face of trustworthiness.
As a result, this increases the profitability rate of a company.
- Dodd-Frank Act
- Health Insurance Portability and Accountability Act (HIPAA)
- Payment Card Industry Data Security Standard (PCI DSS)
- Sarbanes-Oxley Act (SOX)
- EU’s General Data Protection Regulation (GDPR)
- California Consumer Privacy Act (CCPA)
- Federal Information Security Management Act (FISMA)