Regulatory reporting is an integral part of banking and finance. It helps financial institutions to ensure that the financial markets are well-functioning, efficient and effective for all participants. This article will provide an overview of its importance, how
to improve it within the companies, and the risks of not complying.
Regulatory Reporting
Regulatory reporting is the process of documenting information about a company’s activities and operations. It includes everything from internal audits to external reports. The purpose of reporting is to ensure that all relevant information is available to those who need it, and that all aspects of a business are operating according to the law and best practices. The first step to making sure that a bank complies with regulatory reporting is to figure out the laws and regulations that specifically apply to it. Then, there must be certainty that everything is being done to meet those requirementsIn any case, it is likely that banks are already doing some type of regulatory reporting; simple things like keeping records of transactions and processes, having well-implemented procedures, and formalized training, are often disregarded.
What are challenges that come with regulatory compliance?
Companies that do not follow mandatory regulatory compliance practices face numerous possible repercussions, such as being forced to participate in remediation programs that include on-site compliance audits and inspections by the appropriate regulatory agency. Noncompliant organizations usually face monetary fines and penalties. Brand reputation can also be damaged by companies that experience repeated -- or particularly glaring -- compliance breaches. Following compliance rules can be costly from an infrastructure and personnel standpoint.
As companies are required to spend capital in order to comply with compliance laws and regulations, they must also try to appease stakeholders and maintain business processes by turning a profit. These financial challenges surrounding compliance are particularly acute in highly regulated industries, such as finance and healthcare. Other business strategy-associated challenges that come with maintaining regulatory compliance include the following:
