5 Ways to Improve Your Financial Compliance Strategy

5 min

Financial regulations essential to supporting your company with financial crime prevention a...

JCW Resourcing

By JCW Resourcing

Financial regulations essential to supporting your company with financial crime prevention are constantly changing, making it challenging for businesses to stay current. That’s why, now more than ever, organisations must keep their financial compliance strategies updated to align with the latest regulations. But how do you do this? 

This guide will explore five ways to improve your company's financial compliance strategy with financial regulations. These tips will help you stay on top of the latest changes, create a culture of compliance within your organisation, and reduce your risk of non-compliance. We will also explore some of the reasons why you need a compliance strategy, but first, let’s uncover what a financial compliance strategy is.

What is a financial compliance strategy?

A financial compliance strategy is a plan that outlines how an organisation will meet its legal and financial regulations while also supporting the business with financial crime prevention. Having a compliance strategy in place is a critical component of any financial institution's risk management framework, as it helps to mitigate the risk of fines, penalties, and reputational damage. Let’s delve into some of the reasons why you need a compliance strategy.

5 reasons why you need a compliance strategy

From being a tactic used to protect and attract business, steering you clear of legal action, helping to maintain your reputation and more, there are many reasons why your business should incorporate a compliance strategy. 

If your business does not have a financial compliance strategy in place, this section is certainly a must-read for you. However, if you have already established a strategy within your organisation and are looking for ways to improve your financial compliance, feel free to scroll to the next section and discover 5 Ways to Improve Your Financial Compliance Strategy. With that said, let's explore the 5 reasons why you need a compliance strategy.

1. Protects your clients, customers and investors

Implementing a financial compliance strategy into your business will ensure you follow your industry's relevant laws and regulations, but it will also help protect your clients, customers, and investors from financial crimes such as fraud, market abuse, and cyber-attacks. 

2. Helps you maintain a good reputation

When your existing and future clients, customers and investors see you have invested in a financial compliance strategy, this will establish and build on their trust in your organisation. This level of transparency and accountability will increase their chances of staying loyal to and investing in your business, benefiting your broader client attraction and retention strategies while ensuring you maintain a good reputation within your niche. 

3. Keeps you clear from legal action

Financial institutions failing to comply with the rules and regulations of their industry can be subject to significant legal action in the form of fines, penalties, or being sued for breaking the law. By having a robust financial compliance strategy, your business can minimise the risk of any legal action being put on your company. 

4. Enhances risk management efficiencies within your organisation

A well-designed financial compliance strategy can help mitigate financial risks from occurring within your business, be it fraud, cybercrime or making poor investment decisions. Financial compliance strategies can enhance risk management efficiencies within your company, saving your organisation time and money and reducing the risk of errors, omissions and financial losses.

5. Ensures you’re complying with the relevant financial regulations

Having a compliance strategy aligned with international standards and the regulations applicable to your business can ensure your organisation meets the requirements to operate legally and efficiently. This is especially important if your company operates in various industries and markets where different jurisdictions apply. 

5 ways to improve your financial compliance strategy

As we've established above, there are many ways why your business needs a financial compliance strategy. From protecting your clients, customers, and investors, maintaining your reputation, keeping you clear from legal action, enhancing your risk management efficiencies and ensuring you comply with the relevant financial regulations, your organisation must have essential strategies for financial services compliance.

However, we appreciate that creating and abiding by a financial compliance strategy can be complex and daunting, especially with the myriad regulations to keep up with and the constantly changing economic landscape. Thankfully, we're here to give you a helping hand. 

From knowing the relevant financial regulations, embedding a culture of compliance, conducting regular audits and more, we have outlined 5 ways to help you improve your financial compliance strategy. 

1. Know the relevant financial regulations

Step one to improving the financial compliance strategy within your business is to ensure you know the latest and most relevant regulations associated with your organisation and the regions you are located in and do business with. 

Knowing the relevant financial regulations is one thing, but staying up-to-date is another and is something that is crucial to ensuring your compliance strategy maintains relevance as financial regulations evolve. There are several ways to understand and stay up-to-date on the financial rules that apply to your business. 

  • Subscribe to industry publications
  • Attend conferences
  • Sign up for email alerts from regulatory agencies, including the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and Bank of England (BoE)
  • Utilise compliance management software solutions to help you track and manage your regulatory obligations
  • Hire expert talent

From understanding data protection and GDPR, trading regulations, Know Your Customer (KYC), Anti-Money Laundering (AML) and various other accounting standards, you should continuously review the laws and regulations that apply to your industry and stay up-to-date with any new guidance or interpretation from regulators.

2. Embed a culture of financial compliance

Your financial compliance strategy should not be kept locked away as a secret only to be seen by the team members that created it. Instead, your compliance strategy should be known to the wider team, from the board, team leaders, broader employees, and contract staff, as something embedded within your company culture. 

Compliance is everyone's responsibility, and all your employees should understand the importance of it and be empowered to report any concerns or raise any questions regarding your strategy.

One way of ensuring you embed a culture of compliance into your workplace is by providing employees with training on financial regulations and your strategy. This training will allow your people to understand your compliance process and more comprehensive regulations relevant to your business. Of course, the regulation subject matter can be complex, so be sure to simplify the training sessions and make them fun and interactive to keep your employees engaged and on board.

In time, this training could become part of your onboarding process. It can be updated and presented to the team if any amends are made to your policies or other relevant compliance regulations. You could also reward employees for their compliance efforts, making it an incentive fully embedded in your culture.

3. Conduct regular internal and external audits

Another way to improve your financial compliance strategy is to conduct regular internal and external audits. Both types of audits are useful for various reasons, from helping identify compliance gaps within your process and ensuring your organisation meets all applicable regulations.

Here are some reasons why conducting internal and external audits can improve your financial compliance strategy. 

  • Helps identify compliance gaps: Internal and external audits can help to identify areas where your organisation is not in compliance with applicable regulations or if your strategy needs to be updated to keep up with the times. Doing so can help prevent costly fines, penalties, and reputational damage.
  • Assesses the effectiveness of your strategy: Carrying out internal and external audits can assess the effectiveness of your company's compliance strategy to identify areas where your policy can be improved. This room for improvement could include training, monitoring, and reporting.
  • Increase employee awareness: Audits can also help to increase your broader team's understanding of the compliance requirements associated with your business. Here, audits can help to prevent your people from engaging in activities that could put the organisation and themselves at risk. Going back to our previous point, you could conduct regular training, make the wider team aware and embed updates into your culture after each audit.
  • Demonstrates your compliance: Internal and external audits can help demonstrate your compliance to regulators and other stakeholders, which can build trust and confidence in your organisation.

Internal audits would be conducted by your specialist auditor within your business. At the same time, you would need to liaise with any independent third parties associated with your compliance strategy, from vendors like IT providers and product traders, to conduct external audits to mitigate third-party risks. 

Once an audit has been completed and the evidence has been added and reported on, make sure you follow up on your findings and conduct future audits, be it every six months or at least annually, to ensure your financial compliance strategy remains relevant. 

4. Make use of the latest technology

When improving your financial compliance strategy, you should look to lean on the software and technology available to help harness your operations. These technology solutions can help you automate compliance tasks, enhance your internal and external communication, track your regulatory progress, and identify potential risks to your business.

If you want to improve your financial compliance strategy, here are some of the technologies you should utilise:

  • Regtech: Regtech, or regulatory technology, is specifically designed to help businesses within the financial space comply with regulations by automating various manual tasks. These tasks could be anything from data collection, analysis, and reporting. Regtech is an effective tool to help free up compliance professionals to focus on more strategic tasks, such as risk assessment and management.
  • Data analytics: Data analytics can help identify and assess risks, track compliance performance, and monitor compliance gaps within your business. By analysing large amounts of data, you can better understand your compliance risks and take strategic steps to mitigate them.
  • Artificial intelligence (AI): AI is a significant player in the technology landscape and can effectively automate many compliance-related tasks, such as identifying suspicious activity, reviewing transactions, and generating financial reports. Additionally, AI can help you predict future risks and identify potential problems that you can combat before they occur.
  • Cloud computing: Cloud computing can help you improve your financial compliance strategy by providing you with a secure space for storing and processing data, which can help to reduce company costs, improve efficiencies, and minimises the chances of data breaches within your business.

5. Hire a compliance expert

One final way of improving your business's financial compliance strategy is to hire a compliance expert or specialist within the financial services sector. Hiring a compliance expert is an excellent decision, especially if you lack the knowledge and understanding of the various financial regulations associated with your business. 

A compliance specialist can help you improve your financial compliance strategy in the points we listed in the previous sections and the areas below.

  • Compliance specialists can help develop a compliance strategy, including a draft of the policies you want to put in place
  • They can help you assess your company's compliance risks by conducting regular audits
  • Their expertise can support you in implementing the compliance procedures listed in your strategy
  • A compliance specialist can help mitigate financially associated risks, including fines and penalties
  • Ensure you understand and remain compliant with the regulations applicable to your business
  • Help train employees on financial regulations and embed a compliancy focused culture for your business
  • Provide guidance on how to respond to regulatory inquiries and investigations
  • Ultimately, a compliance expert can help instil peace of mind when it comes to ensuring your business operates within the relevant financial regulations

There are a few different types of professionals you can hire to support your financial compliance strategy. Here are some of the most common:

Learn more about these roles and the importance of financial compliance by reading our guide: Why financial crime compliance is crucial for your business.

Final thoughts

Overall, a robust financial compliance strategy is indispensable for any organisation operating in the financial services sector. By following the tips outlined in this blog, you can implement and continually improve your strategy to protect your clients, customers, and investors from financial crimes, maintain your reputation, steer clear of legal action, improve risk management efficiencies, and ensure compliance with relevant financial regulations. 

Looking for Financial Crime Compliance Recruitment support?

If you are a company within the legal and financial services sector looking for industry experts to help you implement essential strategies for financial services compliance, we can help. Our compliance recruitment experts know the ins and outs of the financial market and have access to an unbeatable network of global talent to help you grow your business and stay ahead of the competition.

Find out how we can support your recruitment needs and financial compliance strategy by getting in touch with a member of our team today.