Regulatory compliance is a business’s adherence to regulations, laws, guidelines and specifications relevant to its day to day business activities and processes. Failing to comply with these requirements can result in legal fines, loss of reputation, down time and loss of productivity, as well as imprisonment in some cases. Ensuring regulatory compliance means an organisation has completed tasks such as verifying, keeping up-to-date detailed records, monitoring changing risk profiles, logging risks and more.
Companies are increasingly implementing compliance software to manage repetitive and manual processes, more efficiently and improve their risk management. Here are five key reasons why your business should invest in compliance software
Stay compliant – eliminate risk
It is imperative that organisations are compliant with their country’s laws and regulations. For the UK, the consequences for non-compliance can be severe, depending on the situation. Firstly, and most obviously, your business can be fined, with the most serious safety breaches costing hundreds of thousands of pounds. The FCA published that fines during the calendar year ending 2022, as of mid August was £39,233,360.
In even more serious cases, individuals can face imprisonment for violating AML regulations, facing potential sentences of up to six months in the Magistrates’ Courts and up to two years in the Crown Courts. This could likely affect your right to work in certain sectors or industries, or even restrict your ability to travel abroad. On a more superficial note, an organisation that fails to comply with legislation runs the risk of a loss of reputation and with it, the loss of customers. With this software being implemented more and more, companies will carry out detailed checks to ensure any businesses they work with aren’t subject to any AML flags.
Stronger information security
Compliance processes naturally use and store sensitive information – from a list of the company’s assets and personnel to specific issues and potential vulnerabilities. This is why it is of utmost importance to keep your compliance documentation safe. Modern compliance software solutions have acknowledged this and have implemented security protocols that are designed to protect the data it uses and has access to.
Knowing that your organisation’s information security is ensured for as long as you are legally required to keep your compliance activity records for, is a huge weight off your compliance team’s shoulders.
When using a software solution to manage your compliance processes you can securely implement any changes to PEPs, Sanctions and Adverse Monitoring in real-time. With a well designed software platform, your business can be assured that the regulator, or your internal team, can have access to a full and secure audit trail.
Save time & resources
With something as important as compliance, it is vital that all checks and tasks are completed with precision. Compliance is a critical ongoing process, from the point of accurate KYC/KYB onboarding through the entire lifecycle to ongoing monitoring and remediation.
Manual processes are time consuming, prone to human error and costly on resource allocation. Investing in software to deliver the routine and repetitive tasks to achieve regulatory compliance is so beneficial, as it simplifies the whole process and saves compliance teams time and resources that can be allocated to more complex tasks.
Compliance teams are encouraged to take a risk-based approach to ongoing CDD. Software solutions are increasingly capable of adopting a Red, Amber, Green (RAG) scoring approach – meaning that the risks relevant to each business can be defined; set within the compliance platform and, once breached, provide an alert for further due diligence.
The team can then act immediately, with focus on the complex cases rather than manually looking at each individual case for CDD.
Reduce the risk of human error with automation
Ongoing manual CDD monitoring is time consuming. Automating your processes will free up time and resources, enabling you to focus on the more important things to grow your business. Maintaining compliance relies on completing a multitude of tasks which is not only timely, but also creates opportunity for human error.
Automating the process using a trusted compliance software solution will minimise the risk of mistakes or lost information. Modern software will allow you to monitor the process in real time without having to undertake menial tasks on a daily basis. Compliance teams are able to set up digital rules that asset and relationship managers can respond to, making sure no compliance tasks are missed and are all completed on time. The software will also notify you with what is required and any new risks that need to be addressed.
Lower abandonment rates
A friction-free onboarding process is crucial to ensuring long-term customer satisfaction. When onboarding and monitoring processes are complex and time consuming, customers may lose patience. The automation of processes such as ID verification will help accelerate the onboarding process for businesses in any industry.
Workflows can be digitised and integrated into existing systems. Latency between touch-points is reduced to accelerate time to revenue and every touchpoint can be managed to provide an improved customer journey. Digital onboarding experiences drive competitive differentiation as businesses are redefined from a transactional relationship into a more nuanced relationship between humans and the automated systems and devices they use. With customers experiencing fast and seamless solutions, the rate of abandonment will decrease substantially.