{"id":14724,"date":"2020-08-20T18:34:40","date_gmt":"2020-08-20T16:34:40","guid":{"rendered":"https:\/\/www.viafirma.com\/blog-xnoccio\/?p=14724"},"modified":"2025-11-07T09:13:25","modified_gmt":"2025-11-07T08:13:25","slug":"compliance-finance-sector","status":"publish","type":"post","link":"https:\/\/www.viafirma.com\/en\/compliance-finance-sector\/","title":{"rendered":"What does ‘compliance’ mean in the finance sector?"},"content":{"rendered":"\r\n

The term compliance is gaining strength in all types of companies, acting as a shield against serious legal problems, especially those that belong to the financial sector, which are more strictly regulated.<\/em><\/p>\r\n\r\n\r\n\r\n

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What is \u2018\u2019compliance\u2019\u2019?\u00a0<\/h2>\r\n\r\n\r\n\r\n

We live in an increasingly complex business environment with stronger regulations aimed at protecting all parties involved in business activities. That is why companies need to be extremely careful to ensure that their activities are strictly adhered to all the\u00a0legal requirements\u00a0of their industry.<\/p>\r\n\r\n\r\n\r\n

This is far from being a minor issue, since\u00a0legal compliance\u00a0frees companies from legal problems that could lead to costly monetary penalties. Compliance will allow us to anticipate and prevent many disputes.<\/p>\r\n\r\n\r\n\r\n

The expression compliance was first introduced by the\u00a0Basel Committee on Banking Supervision\u00a0in 2005, and was defined as:<\/p>\r\n\r\n\r\n\r\n

\u2018\u2019the risk of legal or regulatory sanctions, material financial loss, or loss to reputation a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organisation standards, and codes of conduct applicable to its banking activities (together, \u201ccompliance laws, rules and standards\u201d). \u2018\u2019<\/p>\r\n\r\n\r\n\r\n

However, compliance should not be understood exactly as the risk, but as the degree of regulatory compliance, which is inversely proportional to the legal risk. According to\u00a0Deloitte:<\/p>\r\n\r\n\r\n\r\n

“Regulatory compliance consists of setting up appropriate policies and procedures to ensure that a company carries out their business activities under current regulations and internal policies and procedures, promoting a compliance culture among employees, managers and related agents”.<\/em><\/p>\r\n\r\n\r\n\r\n

Through compliance, companies can establish policies and actions to detect and manage the risks derived from non-compliance with legal obligations.<\/p>\r\n\r\n\r\n\r\n

Compliance not only increases legal security, but also prevents vulnerabilities that could be used by criminals, such as cyber-criminals, which could lead to great financial losses. Neither should we underestimate the potential loss of\u00a0reputation\u00a0that will surely affect business results.<\/p>\r\n\r\n\r\n\r\n

Compliance in the financial sector<\/h2>\r\n\r\n\r\n\r\n

By its very nature, the\u00a0financial industry\u00a0is one of the industries where compliance plays a bigger role, due to its strict regulations. This tight regulation results from the many crimes that can be committed, such as money laundering or the illegal financing of both criminal or terrorist organizations.<\/p>\r\n\r\n\r\n\r\n

Out of all the initiatives that have been put in place for risk assessment, let’s start by reviewing the main international standards, namely ISO 31000 and ISO 19600.<\/p>\r\n\r\n\r\n\r\n