What Is The Meaning of Regulatory Compliance?

Regulators will target businesses that do not show regulatory compliance. The multinational electric and gas supplier, Enel Energia, was given a $29.3 million fine in January 2022. The fine was for using personal data without consumer consent. 

It is a brave new world of digital transformation. Businesses must now deal with different regulatory requirements. Consequently, companies must ensure they are compliant when a regulator demands it.

This article will explain what regulatory compliance means to businesses. It will also highlight the main types of compliance. 

What is Regulatory Compliance?

Regulatory compliance occurs when an organization takes steps to comply with specific laws and regulations or guidelines. Organizations need to be compliant with federal, local, and state laws and regulations.

When it comes to regulatory compliance, organizations follow regulations that originate from the government. Regulations help govern how organizations interact with consumers, handle data, and conduct business.

What are Examples of Regulatory Compliance?

Here are seven examples of regulatory compliance and what an organization needs to do to stay compliant for each of them.

California Consumer Privacy Act (CCPA)

The CCPA can protect consumers in the state of California. It gives consumers more control over businesses’ collecting personal information about them. It is a data privacy law regulating companies when they work in California.

The Dodd-Frank Act 

The Dodd-Frank Act promotes stability in the financial services industry throughout the US. It helps by pushing accountability and transparency in the financial system. It protects American taxpayers and consumers from harmful financial practices.

EU General Data Protection Regulation (GDPR)

GDPR is the strictest data privacy and security law globally. Although it is an EU law, it applies to any organization that targets or collects data from people in the EU. Violating privacy and security standards can cost tens of millions of Euros in fines.

Health Insurance Portability and Accountability Act (HIPAA)

The HIPAA is a federal law from 1996 that required the creation of national standards. These standards protect sensitive patient health information from being revealed without the patient’s consent or knowledge.  

Occupational Safety and Health Administration (OSHA)

OSHA is part of the United States Department of Labor and enforces different standards depending on the industry. The laws and regulations ensure that employees can work in a healthy and safe environment. 

Payment Card Industry Data Security Standard (PCI DSS) 

The PCI DSS applies to small businesses right up to global enterprises. If your business handles or stores cardholder data, you must comply with this information security standard. It helps to stop theft and unauthorized use of cards.

The Sarbanes-Oxley Act (SOX)

The SOX act was brought into effect by the US Congress in 2002. It helps to protect investors from fraudulent financial reporting by corporations. Incorrect information can result in fines of up to $1million and up to 10 years in prison.

How can I Improve my Regulatory Compliance?

Laws and regulations are there for a reason. You can improve your regulatory compliance by creating a compliance program. A compliance program allows your business to monitor and improve compliance continuously.

You can also use the services of regtech companies to stay compliant. Digital solutions can easily integrate with existing systems and prompt you on updated rules and regulations. It is also easier to provide information to the regulators.

How Do you Ensure Regulatory Compliance?

Regulatory compliance requires businesses to follow the rules and regulations at all times. Here are some ways organizations can ensure compliance:

  • A compliance team or designated person can proactively check for updated regulations and standards.
  • Give regular training to employees to explain what is required of them to be compliant.
  • The legal team should work together with the compliance team. The teams can review incidents, policies and risks, and public disclosures.
  • Companies can use digital solutions to access real-time information on compliance requirements. Automation can ensure compliance at any time.

What is a Compliance Standard?

Companies need to maintain a compliance standard for how they conduct themselves and their operations. This standard could be related to handling customer and employee data or dealing with retail transactions.

A standard is a minimum expected of a company to adhere to rules and regulations. This standard is a benchmark all companies can use. This measure also lets regulators determine if a company complies with the laws.

What are the Benefits of Monitoring Regulatory Compliance?

When a business has regulatory compliance, it can become more attractive to investors. The company can also implement organizational controls to ensure that employees and stakeholders are treated fairly.

A business can understand where there are meeting specific compliance standards. Additionally, it also can see where they might be failing. The company can then put steps in place to rectify the situation and improve its compliance level.

How is Regulatory Compliance Measured?

A compliance department can track compliance regulations for your business. It works best when you have a designated team that performs regular audits and assessments to measure compliance in the organization.

Many businesses are also now using regtech digital solutions. These automated solutions help them measure their regulatory compliance. At the touch of a button, a report can detail all the company’s business processes. It can also show its current compliance level.

What is Regulatory Non-compliance?

Regulatory non-compliance is when a business or person does not comply with the rules and regulations. Failure to meet regulatory compliance obligations can have different consequences:

  • Organizations can be blocked from bidding on new contracts
  • There is the possibility of civil litigation from third parties
  • Substantial fines
  • It can ruin a company’s reputation 

Why is Regulatory Compliance Important?

Businesses are using more technology than ever. This increased automation of business processes has to be regulated to protect consumers. Governments use regulations to help manage financial fraud, data privacy, and data protection.

Here are some ways regulatory compliance directly affects businesses:

  • Companies that achieve compliance gain respect in their industries.
  • There is less chance of cybercrime when you manage data correctly.
  • A compliant company can attract more clients and increase profits.
  • The company is more secure financially as there is less chance of a fine.

Spend Time on Regulatory Compliance for Your Business

Regulatory compliance is an absolute necessity for companies. Do your due diligence and ensure your business is compliant. You can set up a compliance team to help you stay on track.

If you are still unsure, enlist the help of a regtech company. These companies can create systems that check your compliance daily. Integration is seamless, meaning you don’t lose time setting everything up.

Sally Leslie

Sally Leslie is the content editor for Planet Compliance. She also writes B2B content and case studies for entrepreneurs, SMEs, and startups worldwide. She is a lover of plants, freedom, and football. https://www.contentcatcreations.com/

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