How risky is non-compliance to your business?

How risky is non-compliance to your business? Last year we saw our fair share of AML (anti-money laundering) failures and violations, resulting in eye-watering FCA and HMRC fines. According to Ponemon Institute and security company GlobalScape recent report, the annual cost of non-compliance to businesses now runs an average of $14.8 million, a 45 per cent increase since 2011.

Meanwhile, the range can be anywhere from $2.2 million to $39.2 million. On the other hand, the cost of compliance was found to average $5.5 million, up 43 per cent from 2011. In recent years, adhering to the laws and standards and monitoring the compliance of business processes has evolved as a major concern for business owners.

Staying compliant with ever-evolving regulations has become an ‘obvious’ business imperative, and failing to adhere to these regulations can put organisations in a fix. Before we dive into the risks of falling into the ‘non-compliant dungeon, let’s understand what corporate compliance is. Operating in a multiplicity of countries inevitably also means having to comply with any local regulations.



What is Corporate Compliance?

Compliance at the corporate level involves adhering to a wide range of rules, regulations, laws, and standards designed to protect every aspect of your business. Right from obeying safety guidelines to following the standards for paying wages, an organisation must comply with all the local, state, and federal laws at all times.

Monitoring not only refers to continuously observing possible compliance violations but also includes predicting their occurrence. Since the concept of business process compliance is vast, approaches related to process monitoring are hard to identify. Monitoring the compliance of business processes with relevant regulations, constraints, and rules during runtime has evolved as a major concern in practice.

The cost of non-compliance and monetary fines have been continuously increasing in the past few years. However, business owners are becoming impatient, as these consequences would affect the organisation in many ways. Increased complexity, enforced business changes, and individuals being held personally accountable are all set to continue because of continuous compliance failures.

Why is Compliance crucial?

The following are six fundamental reasons why an organisation should implement statutory compliance.

  • Reason No. 1: is required by Law – All registered companies are mandatorily obligated by the law to follow statutory regulations and comply with them.
  • Reason No. 2: surprise audits – Non-compliance also invites unnecessary inspection and audits, leading to a waste of time and money.
  • Reason No. 3: the financial penalties are high – Failing to adhere to statutory compliance will lead to hefty fines and indirect losses to organisations.
  • Reason No.4: potential imprisonment for everyone involved – Severe cases of non-compliance could result in imprisonment of the organisation’s CEO/Directors/Board members.
  • Reason No.5: Brand Value and Market Reputation – Payment of fines and imprisonment can destroy a company’s brand name in the market it thrives in.
  • Reason No.6: the organisation can be forced to a shutdown – In cases that exhibit perilous non-compliance, authorities can even order companies to cease operations.

Several examples in the global business environment show the repercussions of non-compliance. Look at the following cases:

  • Amazon found guilty of breaching Dangerous Goods Regulations
  • Thames Water was ordered to pay record £20 million for river pollution
  • Google Is Fined $57 Million Under Europe’s Data Privacy Law
  • Westpac accused of 23 million breaches by money-laundering watchdog
  • Italy’s civil aviation authority ENAC threatens to ban Ryanair over alleged non-compliance

The biggest fine so far was the £102m imposed on Standard Chartered for “poor AML controls”, which saw “breaches in two higher risk areas of its business.” This is the second-largest financial penalty for AML failures ever imposed by the FCA.

Improve Your Compliance

A comprehensive compliance solution:

  • Reduces business risks
  • Helps to expedite global expansion
  • Enhances control and visibility
  • Enables the elimination of business risks

After all, when it comes to non-compliance issues, ignorance of the law is no defence. As they say – “Being Compliance is not a choice, but a mandate” the regulatory environment is only going to get fiercer day by day, and companies that miss staying abreast of the global legal amendments might regret big-time.

The UAE, for example, has cracked down on their Ultimate Beneficial Owner compliance requirements – a requirement that costs roughly DH15  but results in a penalty of Dh15,000 up to Dh100,000 if businesses fail to comply.  The Ultimate Beneficial Owner requirement was set up to prevent illicit activities such as money laundering or financing of terrorism.

The requirement reveals anyone who has direct or indirect control of an organisation and requires all such information to set up or renew business licenses to the UAE Government. It’s great to see so many new procedures being put in place that can help you safeguard your business. Are you interested to know how your organisation can excel in global compliance?

Topic: how risky non-compliance to business


About CRI Group

Based in London, CRI Group works with companies across the Americas, Europe, Africa, Middle East and Asia-Pacific as a one-stop international Risk ManagementEmployee Background ScreeningBusiness IntelligenceDue DiligenceCompliance Solutions and other professional Investigative Research solutions provider.

We have the largest proprietary network of background screening analysts and investigators across the Middle East and Asia. Our global presence ensures that no matter how international your operations are, we have the network needed to provide you with all you need, wherever you happen to be. CRI Group also holds BS 102000:2013 and BS 7858:2012 Certifications, is an HRO certified provider and partner with Oracle.

In 2016, CRI Group launched the Anti-Bribery Anti-Corruption (ABAC®) Center of Excellence – an independent certification body established for ISO 37001 Anti-Bribery Management SystemsISO 37301 Compliance Management Systems and ISO 31000 Risk Management, providing training and certification.

ABAC® operates through its global network of certified ethics and compliance professionals, qualified auditors and other certified professionals. As a result, CRI Group’s global team of certified fraud examiners work as a discreet white-labelled supplier to some of the world’s largest organisations. Contact ABAC® for more on ISO Certification and training.



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