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Regulatory Compliance is the term generally used to describe the policies and processes which financial firms have in place to ensure that they follow the very many laws, rules and regulations put in place by the bodies which control financial activity in a given jurisdiction. Those rules and regulations are designed to ensure that such financial activity in the markets is fair, transparent and robust, both between the financial institutions themselves (the so-called professional market) and, probably more importantly, when the financial institutions are selling financial services such as shares, insurance products or other financial products to private individuals.
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Regulatory compliance also describes the goal that corporations or public agencies aspire to in their efforts to ensure that personnel are aware of and take steps to comply with relevant laws and regulations. This will include retaining data or records which can be used for the purpose of implementing or validating compliance.
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It is the set of all data that is relevant to a governance officer or to a court of law for the purposes of validating consistency, completeness, or compliance.
A key component of Regulatory Compliance is the variety of policies and processes firms are required to have in place to meet legislation and regulation designed to prevent the use of the financial system for the purposes of financial crime, in particular Money Laundering and Counter Terrorist Financing. There is probably nothing which can damage the reputation of a financial institution more nor leave it exposed to serious regulatory sanction and fines than the suggestion that it has been used as a conduit to provide funds which have been used to finance Money Laundering or, even worse, a terrorist act.
Even if the institution is an innocent participant, the very link of its name to death and carnage can be damaging. So the institution needs as much help as possible to identify and exclude known terrorists from their business but also to stand some chance of identifying the criminals who are already inside.
Money laundering is the term used to describe the use by criminals of the financial system to hide the source of their funds gained from illegal activity such as drug trafficking, bribery, extortion, embezzlement, theft or other criminal activity, as the criminals try to make their ill gotten gains appear genuine.
Anti Money Laundering is the term used by banks and other financial institutions to describe the variety of measures they have to combat this illegal activity and to prevent criminals from using individual banks and the financial system in general as the conduit for their Proceeds of Crime. In all major jurisdictions around the world, criminal legislation and regulation make it mandatory for banks and financial institutions to have arrangements to combat Money Laundering, with harsh criminal penalties for non-compliance.
Anti Money Laundering processes and controls helps banks and financial institutions protect themselves and their reputation from the criminals. Key elements of a sound Anti Money Laundering and CTF programme, many of them required by law and key aspects of Regulatory Compliance, include:
- Minimum Standards and Policies, approved by Senior Management, which clearly set out your philosophy on crime prevention and business requirements.
- Strong "Know Your Customer" checks at customer take-on to identify and exclude known criminals but also to be sure you know the real identity of the customers you do take on.
- Robust training programmes for all staff.
- Processes (very often automated) to monitor the activities on customer accounts to identify suspicious activity and to check incoming and outgoing payments for unauthorised transactions and to enable reports to be made to relevant authorities.
- Retention of customer files and records of transactions for required statutory periods.
Regulatorycompliance.org gives you access to a wide range of advice, systems and materials which ensure that you can develop a robust Anti Money Laundering and Counter Terrorist Financing framework in your business and a culture of crime prevention across the organisation. In particular, Regulatorycompliance.org gives you access to comprehensive lists to enable you to screen potential customers in order to exclude known criminals, including terrorists, and identify any high profile individuals (such as Politically Exposed Persons) among the customers you do take on. You will then be able to comply with stringent legal and regulatory requirements, keep the criminals away from your doors and protect your reputation.
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