Regulatory compliance is an organization that follows the laws, guidelines, regulations, and specifications relevant to its business processes. Violations of regulatory compliance often cause legal punishment, such as federal fines.

Examples of regulatory compliance laws and regulations are as follows. 

• The Payment Card Industry Data Security Standard (PCI DSS), 
• Health Insurance Portability and Accountability Act (HIPAA), 
• Federal Information Security Management Act (FISMA), 
• Sarbanes-Oxley Act (SOX), 
• EU’s General Data Protection Regulation (GDPR) 
• California Consumer Privacy Act (CCPA).

Why Is Regulatory Compliance Important?

Since the turn of the century, as the number of rules has increased, regulatory compliance management has become more important in various organizations. The development has led to the formation of chief corporate and regulatory compliance officer and compliance manager positions. The primary job function of these roles is to hire employees whose sole focus is to ensure the organization conforms to complex legal mandates and stringent and applicable laws.

As organizations strive to attain their business goals, regulatory compliance processes and strategies give guidance. Audit reports proving compliance that help companies to market themselves to customers. For example, Service Organization Control 1 reports enable the vendors to demonstrate compliance with regulations like SOX. Being transparent about compliance processes helps clients create trust in business processes. It could increase the company’s profitability in the process.

How Does Regulatory Compliance Work?

Regulatory compliance has set a bunch of rules that need to be followed by the companies to make sure they are working within the proper foundation of rules. This procedure includes all the guidelines, internal policies, and training of the employees that they are adhering to the regulations set by the government. ComplianceCompliance is supervised through inspections, audits, and reporting requirements set by the respected authorities.

What Needs to Comply with Regulations?

Regardless of the industry size, the organization should comply with the regulations. It covers all the industries and businesses that are non-profit, government agencies, or related to any entity. Compliance requirements are based on the organization’s specific industry, location, or activity.

How is Compliance Different across Industries or Countries?

Yes, compliance is different across industries or countries because of the different regulatory environments and standards. Let’s take an example for better understanding. 

• Countries – Distinct data protection regulations, such as GDPR in the EU versus CCPA in California & the USA.
• Industries – All healthcare industries must comply with the HIPAA based in the U.S. Otherwise, Financial Institutes comply with regulations, e.g., the Dodd-Frank Act.

Every industry and country enforces unique compliance requirements to combat its particular risks and challenges. 

What is Some Regulatory Compliance?

In easy words, regulatory compliance is an organization’s need to comply with government rules, regulations & industry standards. Major regulatory compliance regulations are mentioned as follows:-

1. General Data Protection Regulation – Security of the privacy and protection of Data in the EU.
2. Sarbanes-Oxley Act – For financial practices and corporate governance of U.S.
3. Health Insurance Portability and Accountability Act – Data privacy healthcare in U.S.
4. Federal Information Security Management Act – For the security of the information in the U.S.
5. Dodd-Frank Security Management Act – To maintain Financial Regulation in the U.S.

What are the Challenges that Come with Regulatory Compliance?

Suppose the Companies do not follow mandatory regulatory compliance practices. In that case, they face numerous possible repercussions, such as being forced to participate in remediation programs containing inspections and on-site compliance audits by the appropriate regulatory agency. Noncompliant organizations usually face penalties and monetary fines. Brand reputation can also be destroyed by companies that experience repeated — or particularly glaring — compliance breaches.

Following compliance rules can be expensive from an infrastructure and personnel standpoint. To comply with compliance laws and regulations, companies must spend capital, try to compromise stakeholders and maintain business processes by turning a profit. These financial challenges surrounding compliance are particularly severe in primarily regulated industries like healthcare and finance. Other business strategy-associated challenges that come with maintaining regulatory compliance include the following:

• Identify how currently growing regulations will influence business direction and existing business models;
• incorporating and developing a compliance culture and promoting this culture in the entire organization;
• deciding on and recruiting compliance roles and accountabilities, as well as the compliance functions needed by legal, audit, compliance, and business departments; and
• Efficiency is increased by anticipating compliance trends and integrating regulations. 

Constantly developing consumer technologies also pose compliance complications for companies. For example, the personal mobile devices used by employees in the workplace create compliance concerns due to these devices storing sensitive, compliance-relevant company data. 

The proliferation of the Internet of Things has created significant growth in endpoints and interconnected devices, and loss of security for mobile and IoT devices causes compliance vulnerabilities in organizations’ networks. Digitized companies must stay on top of required updates and immediately patch existing software to remain compliant when vulnerabilities are detected.

How do Companies Ensure Regulatory Compliance?

Regulatory compliance requires companies to evaluate their unique requirements and any mandates specific to their industry and then meet these requirements by developing processes. The following Typical steps are used to achieve regulatory compliance,

• Identify applicable regulations: identify which laws and compliance regulations are relevant to the company’s industry and operations. These include state, federal, and municipal rules.
• Determine requirements: determine the requirements in each regulation related to the organization and consider plans to implement these mandates.
• Document compliance processes: The document compliance processes, with specific instructions for each role involved in maintaining compliance. During regulatory audits, this information will be beneficial.
• Monitor changes and identify whether they apply. Compliance requirements are updated continuously. Changes should be monitored to determine if they are relevant to the company. If they are, implement updated compliance, then provide training to the appropriate staff on these updates.

To review the organization’s adherence to regulatory guidelines in-house compliance audits should be conducted regularly. These in-house audit reports closely analyze compliance processes and their associated policies, such as user access controls.

In-house audits are also used to prepare for externally conducted, formal compliance audits by independent third parties. These in-house audits are required under some regulatory compliance mandates. They are prepared to evaluate if an organization complies with specific state, federal, or corporate regulations.

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What are the Risks of Non-Compliance?

Non-compliance with the rules can impose severe risks for businesses, so here is a detailed list of the risks of non-compliance:-

1. Legal Consequences – Legal Fees and Litigation.
2. Personal Liability – For dedicated/Responsible employees & Executives.
3. Reputational Damage – Mislaying Trust and Credibility.
4. Financial Penalties – Crucial Fines and Penalties.
5. Operational Disruptions – Suspension of Business.

What are the Fines for Non-Compliance?

There are many problematic outcomes of non-compliance, and fines are one of them. Certainly, penalties for non-compliance can vary based on the severity and regulations of violation. 

The list of the non-compliance fines is as follows:-

SOX – Based on the violation, fines, criminal penalties, or imprisonment can be counted in thousands to millions of dollars.

GDPR – Fine can range under 20 million euros or 4% of annual global turnover.

HIPAA – Fines can be up to $100 to $50,000 per violation with an annual maximum of $1.5 million.

The Benefits of Regulatory Compliance

Maintaining compliance helps your company reduce risks like security breaches and data losses and avoid disciplinary action that could cause license revocations, lost customers, damaged reputations, and financial penalties and losses.

A few specific benefits are followed by:

• Keeping up with a regularly changing regulatory environment: To meet federal, industry, and state standards, perfect compliance may feel like a far-off dream for companies needing help continuously adapting and updating their regulations. A GRC platform with compliance programs can help you anticipate these sudden curves in the road more effectively.
• Protecting your business resources and reputation: Noncompliance can result in significant reputational losses and reduce trust with your customer base. You mitigate these risks and help to keep daily operations running smoothly by maintaining regulatory compliance.
• Protecting you from cybersecurity threats: Cybersecurity compliance is used to reduce the risk of your company’s data breaches and malware attacks internally and externally. 
• Improving efficiency: Many regulatory compliance protocols need streamlined business processes, structured data storage, and regular reports on business functions. All of this work is used to promote your company’s efficiency over time, helping to decrease your costs.

Why Choose ELT Corporate for Regulatory Compliance?

ELT Corporate is the most famous and experienced company in India. True to their words and always available for the clients. Services are offered at very affordable rates as compared to market prices. If you are willing to get the best work in the market, consult ELT Corporate and get the best service from an Indian regulatory consultant.