How to put together a compliance plan

The compliance or risk officer’s role is an essential component of every regulated firm, regardless of its size or industry. The compliance function is essential for firms to avoid legal risks, financial penalties, and reputational damage. Helping a firm stay on top of regulations and ensuring that it is operating within the regulatory boundaries is a demanding job, with high stakes.

With regulations such as the Senior Managers Certification Regime (SMCR), the Department of Justice’s (DOJ) string of enforcement actions against CCOs to promote accountability, the Banking Executive Accountability Regime (BEAR) and the Senior Executive Accountability Regime (SEAR) as well as the many other regulatory initiatives, the risk of being responsible for a firm’s non-compliance is, quite frankly, daunting.

But rest assured, there’s ample opportunity to get compliance right before regulatory penalties. Keeping compliance at the forefront of your business policies and procedures will demonstrate to regulators that there is a conscious effort to reduce and foresee compliance risks. This will lead to a stronger and more trusting relationship between firms and regulatory bodies who are, ultimately, simply looking to ensure that the right structure is in place to support their regulations and protect the consumer.

5 ways to put together an effective compliance plan

No matter which industry your firm is in, here are some tips and tricks for putting together a compliance plan:

1. Identify the relevant regulations to your firm

The first step to any compliance plan is to identify all the applicable laws and regulations relevant to your company. In the financial services industry, regulations such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, Markets in Financial Instruments Directive (MiFID 2), the General Data Protection Regulation (GDPR), Anti-Money Laundering (AML) and Know Your Customer Regulations (KYC) could be appropriate.

Identifying regulations is a crucial step in compliance. This can begin with understanding your sector and the business activities and operations, researching the websites of the appropriate regulatory body, engaging with industry associations, consulting with legal experts, and regularly reviewing relevant news and industry publications.

This can take up a huge amount of time for compliance teams. Fortunately, with the emergence of AI, there are now tools available to support and reduce the resource needed to stay on top of research, freeing up valuable time for the compliance team to focus on supporting business functions and focus on the implementation process. AI-powered regulatory change management software uses machine learning to trawl thousands of regulations, news, publications, and speeches replacing the need to do relentless hours of manual research. Once the wheels are in motion for the topics your firm is interested in for example AML and KYC, every single publication or regulatory change that is related to AML and KYC in your chosen regions and languages will be flagged.

2. Assess your firm’s current compliance processes

Check whether your firm is currently complying with all relevant regulations by performing a check on your current compliance processes. This could include reviewing documented policies and manuals, and evaluating whether these documents are up-to-date and aligned with applicable regulations.

Speaking with key stakeholders or fellow compliance officers can support gathering feedback on current processes, identifying bottlenecks, and getting up to speed.

Regulatory change management software is a valuable tool to help track your compliance status and automate the compliance monitoring process – making it far easier to stay on top of regulatory requirements.

3. Identify compliance gaps

It’s important to identify any gaps or weaknesses in controls, such as monitoring systems. This can be a hefty task, but using regulatory technology to scan for compliance risks is the most efficient way to ensure every regulatory gap is detected, mitigating any risk of human error.

An automated solution such as CUBE can alert your firm every time there is a change in regulation or the appearance of a new obligation. CUBE captures, translates and transforms thousands of sources in near real-time, ensuring that your firm stays compliant.

4. Develop compliance procedures to address these gaps

Once your current compliance status has been assessed and gaps have been identified, the next step is to address any gaps and regulatory risks by developing policies that ensure compliance.

As always, a manual approach to this task will be time-consuming and potentially stressful. Using an automated regulatory tool such as CUBE allows compliance officers to create, manage and assign policies to specific employees.

5. Implement continuous monitoring for regulatory change

Regulatory change is a never-ending task. Updated regulations emerge daily: keeping on top of these changes is a constant challenge.

CUBE’s elite horizon scanning feature helps firms to identify new compliance risks and provide appropriate improvements to current policies and procedures. With access to regulations from every single country in the world and in every language, CUBE is home to a complete regulatory inventory, readily available to suit your compliance needs.

CUBE comment

Compliance is critical to the success of any business. Putting together a plan is an essential step in ensuring that your firm meets all applicable regulatory obligations. By using CUBE’s AI-driven regulatory solution, your firm can streamline compliance, reduce the risk of errors, and ensure compliance. We can help you to take a proactive approach to managing the volume and complexity of regulations.

Find out how CUBE can help your firm build a fully comprehensive regulatory inventory.