How to Establish a Robust Internal Compliance Process

Effective AML Comp. Program

Developing a robust internal compliance process is of the utmost importance as it helps businesses navigate the complex regulatory landscape. By doing so, organisations can anticipate and prepare for current and forthcoming challenges in a timely manner.

With global authorities continually revising and strengthening laws to combat various illicit practices in the corporate realm, such as fraud, market manipulation, and money laundering, maintaining compliance has become an indispensable aspect of business operations.

In this article, we will share seven important steps to help you establish a robust compliance process and safeguard your business.

  1. Understand the regulatory environment

Before proceeding, it’s important to have a clear grasp of the regulatory landscape. The regulatory environment is constantly evolving, so keeping your team informed about the latest trends is essential. This includes staying up-to-date with local regulations and those of the regions where your business operates.

Once you understand this, you can break down the procedures and requirements, providing your employees with the necessary grounding to comply with an effective compliance program.

  1. Define your goals

Once you have a solid understanding of the current regulatory landscape, it’s important to clearly outline the objectives you want to achieve with your compliance management strategy. Your goals might include reducing penalties, minimising retrospective investigations, fostering closer collaboration between compliance and business growth, enhancing internal understanding, or preparing for new legislation impacting your organisation. Conducting a risk assessment will help you identify priority goals for the short-term and long-term, allowing you to set achievable targets within specific deadlines.

  1. Develop formal policies, procedures, and standards

After thoroughly understanding the existing and anticipated regulatory landscape and setting your goals, you can proceed with crafting formal policies, procedures, and standards necessary for legal compliance. While many of these procedures may align closely with the technical standards outlined in the legislation, it’s also prudent to incorporate internal checks to proactively detect potential human or software errors before any negative consequences arise.

A valuable step in this process is collaborating with regulators to establish best practices concerning the regulations. Seeking input from these authoritative bodies ensures that you have accurately interpreted the legislation and that your compliance strategy is moving in the right direction. Their guidance can be instrumental in fine-tuning your approach to compliance.

  1. Align with your corporate culture

Integrating compliance with your corporate culture is key to gaining acceptance and support for your new policies throughout the organisation. Employees will better understand its significance by demonstrating how compliance is advantageous at every level of the company’s structure.

Backing up your policies with evidence of how compliance mitigates risks in various strategic areas of the organisation is essential. Whether it’s the CEO, other company leaders, or temporary staff, ensuring a commitment to total transparency is crucial for effective risk management.

  1. Train your employees

Comprehensive training for your employees is vital to maintain business compliance. They should be well-versed in the required procedures and their underlying reasons. It is crucial to equip your workforce with the knowledge of identifying compliance issues, reporting them, and following escalation protocols. Management should also be well-informed about handling reports, the appropriate steps to take, and how their interactions with business partners may be impacted.

Moreover, employees at all levels must be familiar with the correct procedures to prevent compliance issues. This includes understanding how to handle personal data, deal with whistleblowers, and implement proper Know Your Customer (KYC) and Customer Due Diligence (CDD) protocols while onboarding new customers.

  1. Ensure accurate record-keeping

Accurate record-keeping is a critical aspect of compliance, particularly in areas of legislation that demand meticulous documentation. For instance, under the Market Abuse Regulation (MAR), records of suspicious reports, inside information, and disclosure delays must be retained for five years. Clearly outlining compliance rules for employees dealing with such matters is essential to avoid potential financial penalties that could arise from incorrect record-keeping. For example, ensuring all insiders are added to a permanent insider list in compliance with MAR.

In certain cases, specific regulations may impact the records organisations retain or do not retain. For instance, the EU Whistleblowing Directive necessitates establishing a whistleblowing process and receiving employee reports. However, under the General Data Protection Regulation (GDPR), organisations are prohibited from retaining irrelevant personal information from these reports. GDPR also mandates that records of reports should be retained only for the necessary duration of the investigation. Maintaining compliance with these record-keeping requirements is crucial to avoid any legal complications.

  1. Monitor compliance

In order to understand if your processes and compliance systems are working, you should routinely and consistently monitor your performance. Monitoring your performance involves assessing whether you are meeting your set goals using available insights and analytics, as well as determining the return on investment for your compliance strategy.

Conducting periodic checks on progress, such as quarterly or annual evaluations, supports your compliance efforts and demonstrates to senior leadership the advantages of an efficient program. This enables decision-makers to justify the investment made in corporate compliance.

Compliance officers should engage in surveys to gauge employees’ understanding of various regulatory requirements and their satisfaction with existing policies and procedures. By identifying potential bottlenecks in reporting or other process issues, consistent monitoring of performance and asking relevant compliance questions allow for procedural adjustments and continuous improvement.

How can Youverify help with your compliance process?

Youverify offers valuable assistance to banks and startups by automating their AML (Anti-Money Laundering) compliance process. Through our platform, you can efficiently onboard more customers without being hindered by traditional compliance systems. Our compliance builder simplifies the onboarding process by consolidating over 300 data sources into a single workflow, facilitating automated decisions with precision.

Our AI-driven solutions empowers businesses to automate their end-to-end compliance needs efficiently and cost-effectively. With real-time customer data verification, businesses can seamlessly onboard customers while ensuring compliance with AML regulations across 120+ global and local country data sources. Connected to these data sources, Youverify is able to offer real-time back-end data source verification for key AML compliance procedures like sanction list, PEP screening and ID data matching.   

By leveraging our technology, businesses can confidently approve customers, streamline compliance decisions, and effectively combat fraud using data-driven insights. With Youverify, you can enhance your compliance procedures, ensuring seamless operations while maintaining high levels of accuracy and security.

Book a demo to learn more.

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