Companies are facing increasing regulatory pressure to tighten up their compliance procedures. Even just within the EU, in recent years they have had to implement internal reporting channels to comply with the EU Whistleblowing Directive. Many organisations across the bloc have had to strengthen pre-clearance procedures for employee personal trades as mandated by the Markets in Financial Instruments Directive (MiFID II). There have also been a host of anti-money laundering initiatives to comply with as the European Union continues to escalate its approach to fighting wrongdoing in financial services and beyond.
Thankfully, regulatory compliance management tools are available to help. Compliance automation helps to ease the burden on overworked compliance teams. It allows you to filter out the opportunity for human error when you conduct the necessary procedures to remain within the law.
1. What is compliance management software?
Compliance management software is a series of programs that perform a number of compliance-related functions, including:
- Performing tasks related to your regulatory requirements. For example, approving or declining pre-clearance of employees’ personal trades based on your custom parameters.
- Monitoring and tracking your compliance efforts to ensure that you remain within the boundaries of the relevant legislation and standards. For example, confirming that your insider lists are up to date and insiders have populated the correct information into the tool.
- Auditing compliance efforts by collecting, archiving and analysing data gained during the process. For example, collating statistics on how quickly your team responds to whistleblowing reports.
2. Types of compliance management software
The benefits of compliance management software
2.1 Stay in-tune with regulatory changes
Compliance management software designed for industry-specific functions is kept up-to-date with the latest amendments to legislation, as well as the best practice guidelines, by its developers. This means that you don’t need to spend time monitoring details of potential rule changes and rewriting internal systems to accommodate them. As soon as anything changes, the software updates to reflect that, keeping you compliant.
2.2 Increase visibility
Having a centralised tool for your compliance efforts lets you visualise the processes you have in place. The software allows chief compliance officers to drill down into the data the program collects to understand the trends that are occurring and to see the progress of various cases relating to compliance issues. All of the information you need is at hand on dashboards to help you refine your strategies.
2.3 Automate compliance processes
In a fast-moving world, there is little time free for compliance teams to spend on the lengthy administrative tasks involved in remaining compliant. As a chief compliance officer, you want your team dedicated to more value-generating tasks, so automating compliance processes saves them time while minimising the risks of human error during manual reporting.
2.4 Improve accountability
The reporting tools included in compliance software allow you to prove the success of your policies. The performance of compliance functions can be quantified given the data that you collect and this provides accountability for the compliance function.
2.5 Stay informed
If anything changes in the status of your organisation’s compliance efforts, a specific compliance management tool will alert you. This means that you don’t risk potential financial penalties. You can remedy compliance breaches and make sure your processes are ready for forthcoming legislation changes.
2.6 Improve collaboration
Modern compliance management systems tend to exist in the cloud. This means they are great for collaboration between compliance team members. You can typically assign tasks and issue or request status updates within the task management area of the tool. It also allows you to share documents in a manner that reduces the risk of people working on different versions.
Collaborating online in real-time on compliance framework documents that update simultaneously is less labour intensive than having to open them, edit, save and then send them around again. This document management capability also removes the risk of someone missing a vital update or having three or four different iterations of the same document travelling around the company.
2.7 Reduced costs
Even with an ever-shifting regulatory landscape, you do not have to increase numbers in the compliance function to cope when you use a compliance management tool. With existing team members relieved of the time-consuming administrative tasks, they are free to concentrate on more of the work that drives real value. The tool runs alongside your team members, keeping your processes up to date, without anyone having to spend time trawling through reports about potential future legislation.
3. How to choose a compliance management tool
With so much competition in the market, you have to make an informed decision before you choose the right compliance management tool for your business. Here are some of the elements that you must bear in mind when seeking out the solution for your organisation.
3.1 How our compliance solutions help
We provide a number of compliance management tools to businesses across a range of industries. Each application is designed to assist compliance with a different piece of legislation that concerns that industry.
4. FAQs
4.1 What is automatic compliance?
It is important to understand where you stand with your regulatory requirements in order to avoid a compliance issue arising from your business operations. Automatic compliance is the ability of compliance software to automatically check the actions performed to ensure they meet the parameters of the relevant law or regulation.
4.2 Who is responsible for the compliance management system?
The chief compliance officer or head of the compliance department is responsible for the compliance activities, including the management system. They oversee the design of the company’s compliance strategy and how the software fits into it. They use the reporting features to assess the success of the tool and the accumulated data to refine their strategy for internal control of the compliance workflows.
4.3 What are the common features of compliance tools?
Compliance tools will typically feature capabilities to ensure they protect the data fed through them from security threats. They also offer archiving and reporting tools, allowing you to access information easily for your own assessments and for external audit trails too. You can also use many of these tools for collaboration, document management and automating certain tasks related to the current regulatory requirements.