Obviously financial institutions such as banks, investment and insurance companies have to be fully financially compliant, but then so do many other types of business.
A basic example is the need when handling financial matters such as processing payroll and payments to contractors to use and complete the relevant official paperwork and submit it in good time.
What is compliance?
In a nutshell it means to ‘comply’ with rules and regulations, but it’s usually expressed in two parts:
- Level 1 – compliance with the external rules imposed on an organization as a whole
- Level 2 – compliance with internal systems and controls instituted by the organization to achieve the compliance requirements of rules imposed on that organization from outside.
Meeting financial compliance requirements
This will vary depending on your business type; obviously a financial institution or business in a financial field such as a financial adviser will encounter compliance in nearly everything they do from serving their customers and what they say in their marketing materials.
Indeed, financial organizations such as banks and investment companies not only employ a compliance officer but a dedicated compliance department.
A business not involved in the financial industry won’t likely have as much compliance leveled upon it but there will be certain obligations. For a start there’s data protection especially if dealing with individuals and companies based in the EU (European Union).
These countries are bound by GDPR (General Data Protection Regulation), the latest data-related legislation designed to ensure those handling data do so properly even if it’s basic name and email recording.
So if you sell products and services to people or businesses based in the EU then you have to be GDPR compliant.
How can you find out what compliance is required?
The first port of call would be to check with any industry body that covers your business type to see what compliance aspects you may need to be aware of.
If your trade or industry doesn’t have clearly signposted methods of understanding what compliance entails, then this is a useful resource to start with and they offer training options.
Understanding how to achieve basic financial compliance such as when handling day to day financial admin and procedures can be ascertained from bodies such as the IRS (Internal Revenue Service) when it comes to handling activities such as tax and submitting the right paperwork.
Your accountant may be able to help advise on at least the basic steps to ensure you’re financially compliant and advise on where to find more detailed information.
There’s a good chance that certain industries and trades would have compliance specialists who could come and advise on what you need to do and how to conduct affairs to achieve and maintain compliance.
What might be part of financial compliance?
The following would be under a financial compliance umbrella:
- Legal compliance
- Managing fraud
- Anti money laundering
- Customer due diligence
- GDPR
Make sure you’re aware of what compliance looks like for your business and industry so that you can avoid falling foul of the rules.
