'Regulatory Compliance' is explained in detail and with examples in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
Regulatory Compliance refers to companies choosing to incorporate standards that meet certain government requirements. It could also be thought of as the specific set of regulations which a firm has to observe when it meets the given requirements. Because of the ever growing burdens of regulations, companies are increasingly finding they must become more transparent operationally.
This is why they find the need to adopt a universal set of controls for compliance. The idea is to measure up to all government mandated requirements while avoiding any wasted resources or duplicated activities in the process. Even when done effectively and efficiently, this level of compliance is often both costly and burdensome for businesses and other organizations to meet.
There are a number of organizations that produce a set of standards to make such Regulatory Compliance simpler. ISO is the International Organization for Standardization. They create such internationally observed standards as the ISO/IEC 27002. Another group which develops the electro-technology arena international standards is the IEC International Electro-technical Commission. There are other specialized compliance issuers in various countries and industries. One of these is the ASME American Society of Mechanical Engineers. The SEC Securities Exchange Commission issues and enforces standards of regulation compliance for publically traded stock companies. The CFTC Commodities and Futures Trading Commission handle the compliance for the commodities trading industry.
There have been numerous triggers for greater amounts of Regulatory Compliance over the past several decades. Many of these revolved around corporate failures and scandals which could have been easily prevented had more regulation been part of their various industries. A classic example of this is the Enron failure from 2001. Thanks to this and the WorldCom scandal, the United States Congress enacted the Sarbanes-Oxley Act for setting standards for greater compliance and regulation for upper level corporate management reporting accurate and truthful financial statements. The Consumer Protection Act and Dodd-Frank Wall Street Reform Act also followed after a need for still more regulation compliance became evident in events like the Global Financial Crisis and subprime mortgage meltdown from 2007-2009.
In the United States, Regulatory Compliance generally revolves around regulations and laws. Such legal statutes come with civil and/or criminal penalties for violating the relevant regulations. There are a number of agencies within the United States government which handle and enforce the issues of regulation compliance. Among these are the OFAC Office of Foreign Assets Control, the U.S. Small Business Administration, and the OSHA Department of Labor, Occupational Health and Safety Administration.
OFAC is the agency which deals with Regulatory Compliance for trade and economic sanctions. They operate under the Department of the Treasury’s Terrorism and Financial Intelligence division. The goal of this regulatory agency is to handle and enforce U.S. foreign policy- and national security policy-based trade sanctions and economic embargoes. They target foreign organizations, countries, and individuals who are on the Treasury Department list.
The U.S. government maintains many Regulatory Compliance statues pertaining to businesses. The Small Business Administration offers its services to help small companies with information and access to various government services under its Business.USA.gov website.
The United States OSHA is a congressionally created agency for enforcing healthy and safe working conditions for all people in the country. They erect and enforce various standards pertaining to education, outreach, training, and assistance. This agency is responsible for Regulatory Compliance in the areas of recordkeeping, agriculture, maritime law, and construction.
Such laws are not the same in every country however. As an example, the United Kingdom has its own laws for Regulatory Compliance. These are among the most similar to the United States’ own laws in many ways. Among the compliance acts and frameworks for organizations and businesses in Great Britain are those created by the Data Protection Act of 1998 and the Freedom of Information Act 2000. Their FRC Financial Reporting Council lays out standards for appropriate practices of company leadership pertaining to accountability and effectiveness for the shareholders. They issue the UK Corporate Governance Code, which is most like the United States Sarbanes-Oxley Act.
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