There are many things to consider if you want your business to succeed. Taking time to manage your legal and regulatory compliance should be high on your checklist. Setting up a compliance team in your business is one of the best ways to handle this complex area.
When you get regulatory compliance right, it can help to streamline your business. On the other hand, getting it wrong can lead to severe fines and penalties. No company wants to put itself in that position. Get ready to find out what you need to know to ensure regulatory compliance.
What is the Meaning of Regulatory Compliance?
According to Wikipedia, regulatory compliance describes the goal businesses aim for in achieving compliance. It refers to all the steps a company takes to comply with laws and regulations. Many companies are automating compliance controls to avoid duplicate work. Also, to handle the increasing number of regulations.
Regulatory compliance requires businesses to organize themselves to adhere to the laws and regulations in their industry. The organization’s policies, procedures, and processes help support its compliance efforts. The ultimate goal is to meet all guidelines, laws, regulations, requirements, and rules.
What Are Some Examples of Compliance?
Compliance can depend on your particular industry or how you conduct your business. Examples of regulatory compliance laws and regulations are:-
- California Consumer Privacy Act (CCPA)
- General Data Protection Regulation (GDPR)
- Sarbanes-Oxley Act (SOX)
- Health Insurance Portability and Accountability Act (HIPAA)
- Payment Card Industry Data Security Standard (PCI DSS)
How do you Monitor Compliance with Work Procedures?
Monitoring your compliance is vital if you want your compliance efforts to succeed. It’s not as simple as having a list of compliance regulations on record. It would be best to incorporate compliance monitoring into your business processes. A compliance program can be an integral part of your organization.
- Manage company policies and procedures
Ensure that you document your company’s policies and procedures correctly. Place the policies and procedures in the employee handbook so everybody knows what they need to do. The compliance team must update policies and procedures when regulations change.
- Educate employees on the importance of compliance
You can make sure the documents are available digitally and physically. Don’t forget to train employees in new areas, to understand what they need to do. You can also introduce a reward system for employees that follow the rules and violations for those that do not.
- Monitor changing laws and regulations
Your compliance team needs to stay on top of changing laws and regulations. It is a constant process to monitor regulations and update company policies. It’s best to have a system so your company can quickly adapt. Software solutions can also help monitor and update changes to meet regulatory compliance.
- Conduct regular compliance audits internally
A compliance audit is the best way to monitor how your company is doing in its regulatory compliance. It can highlight gaps and bottleneck areas so you can step in and take immediate action. Schedule audits into your business operations. Also, do a few unannounced to gather a clear picture of your compliance situation.
- Use a software solution to streamline your compliance
If you are not doing so already, you could consider using a software solution for your compliance. You can save a vast amount of time and money by automating policies and procedures. Also, many solutions can automatically update your system when rules and regulations change. It is a far more proactive approach to compliance.
What is Legal Compliance?
Legal compliance means being compliant with regulations but adhering to legal requirements. These could include local, national, and provincial legislation, codes, company policy, and standards. Legal compliance can affect every area of a business.
When it comes to legal compliance, a business must ensure compliance with the regulations. Additionally, it must implement robust internal compliance controls to match relevant rules and processes. The company must show that it understands the legislation and complies with it.
Legal Compliance Examples
Here are a few legal compliance examples so you can see what regulatory compliance requirements can involve:
Payment Card Industry Data Security Standard (PCI DSS)
PCI DSS helps consumers by making sure that data security is a priority. The regulation pushes merchants to store financial information property. Also, payment processors must ensure that any internet data transfer is secure.
Health Insurance Portability and Accountability Act (HIPAA)
HIPAA helps with the data protection of patients’ information. HIPAA monitors how healthcare organizations look after data. It can be anything from how patient data is disclosed, managed, stored, and viewed.
Federal Information Security Management Act (FISMA)
The United States Congress passed FISMA in 2002. It states federal agencies must implement security measures to protect sensitive data. Originally FISMA was only for federal agencies, but now includes state agencies that manage federal programs.
Sarbanes-Oxley Act (SOX)
Another important piece of legislation in the United States is SOX. Its primary purpose is to monitor internal accounting for publicly traded companies. It will soon be brought into law in the UK as well.
EU’s General Data Protection Regulation (GDPR)
In the European Union, GDPR is strict legislation to protect EU consumers. It gives consumers more control over how their data is used and stored. Any company using EU consumer data must have controls in place to delete data.
California Consumer Privacy Act (CCPA)
CCPA is protecting consumers, specifically in the state of California in the United States. It is similar to GDPR. Any business that uses California consumer data must disclose this. Also, steps should be in place to delete data if requested.
What are the Legal Requirements of Compliance?
Here are some of the legal requirements for compliance:
Standards, policies, and procedures
A business must put policies, procedures, and standards in place to comply with the laws and regulations.
Compliance program administration
A dedicated compliance team must monitor and update the compliance program on a continual basis.
Screening and evaluation of employees and vendors
A system to screen and evaluate employees, vendors, and other agents. This system can give the business peace of mind that everybody is compliant.
Communication, education, and training on compliance issues
The business needs to ensure regular communication, education, and training on compliance issues with its employees.
What is the Difference Between Compliance and Legal?
Compliance is the process of making sure your business complies with any legal and regulatory requirements. A compliance department tracks and monitors laws and regulations. Also, it updates company policies and procedures to ensure compliance.
Legal work involves managing legal risk, such as interpreting the law, handling disputes, and litigation, managing employment law, reviewing contracts, checking privacy law, etc.
There can be some crossover between the two roles. However, the compliance team works closely to prevent legal problems and makes the company as safe as possible. The legal team’s role is to reduce legal liability.
What are the Steps for Evaluating Legal Compliance?
You can evaluate legal compliance by:
- Knowing the regulations that apply to your business
- Understanding the reporting requirements for each regulation
- Take control of policy management and keep it up to date
- Create a centralized area for records
- Check that the company is also complying with codes of conduct and ethics
- Keep your employees up to date with any regulation changes
- Schedule regular compliance checks to see how the company is doing
How to Ensure You’re Fully Legally Compliant
When in doubt, you can arrange for an independent external auditor to come and evaluate your company. The auditor can point out any problem areas that may arise. You can then rectify the problem to ensure you are fully compliant.
Regulatory compliance is not as complicated as you might think. However, as a business owner, you must manage it correctly. You can use this article to help you formulate a compliance strategy. By following compliance regulations, you can stay on the right side of the law and the regulators.