Compliance trends for the future: what to watch out forStay ahead with our latest insights on what to watch out for in the changing world of compliance.
As industries evolve, so too does the regulatory landscape that governs them. Compliance, the act of adhering to these rules and regulations, is a dynamic field that constantly needs to adjust to accommodate new laws, advances in technology and shifts in social norms. A massive 95% of organisations have established or are in the process of building a culture of compliance, as per Accenture’s 2022 Compliance Risk Study.
The alternative? Legal action and/or hefty fines. As the former U.S. Deputy Attorney General Paul McNulty famously said, “If you think compliance is expensive, try non-compliance.”
The Financial Conduct Authority (FCA), for instance, has penalised several leading banks for poor management of their Anti-Money Laundering systems (AML). Standard Chartered Bank, HSBC, and NatWest have been fined £102.2 million, £63.9 million and £264.8 million respectively following investigations. And globally, the cost of non-compliance has increased by 45% since 2011.
Needless to say, if you’re a business leader or a compliance specialist, keeping updated with the latest emerging trends and future developments is essential! In this blog, we’ll help to keep you a step ahead by providing insights on what to watch out for in the changing world of compliance.
Trend 1: The rising importance of data privacy
If you’re in compliance, you don’t need us to tell you how important data privacy has become in recent years. Clay Shirky, Internet scholar and professor at N.Y.U suggests, “It used to be expensive to make things public and cheap to make them private. Now it’s expensive to make things private and cheap to make them public.”
It’s been a growing concern for consumers and regulators, especially with the advent of digital technologies that collect and store vast amounts of personal information.
The European Union's General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA) and Consumer Duty are just some examples of recent regulatory changes aimed at protecting consumer data.
As more and more regions adopt similar measures, businesses will need to continuously update their compliance strategies to avoid hefty fines and reputational damage.
Trend 2: The role of technology in compliance
Technology is playing an increasingly important role in every area of business, compliance included. Regulatory Technology (RegTech) solutions can automate complex compliance tasks, reducing the risk of human error and increasing efficiency. And these kinds of solutions can also provide real-time monitoring and reporting, allowing businesses to proactively address compliance issues before they escalate.
Artificial Intelligence (AI) and Machine Learning (ML) are also being used more and more frequently in compliance. AI can analyse large volumes of data to identify patterns and anomalies, while ML can adapt to changing regulatory environments and learn from past compliance issues. These technologies are helping compliance specialists to carry out their roles more efficiently, as well as helping businesses to stay one step ahead of regulatory changes and better manage their compliance risks.
Trend 3: Ethics surrounding tech and AI usage
Although a useful addition to compliance processes, AI can also in fact raise its own compliance issues.
Think programmes such as ChatGPT, JasperAI, DreamStudio, and other content generating tools which can all come with several ethical concerns. Not only are these advancements hugely popular with the general public, but they’re now also making their way into corporate environments.
AI systems like these sometimes rely on large amounts of data to create written and visual content, raising more data privacy considerations. But there are further deliberations…
There’s an ongoing debate regarding AI and its ability (or rather, inability) to align with values and morals. And this is another area for compliance professionals to take into account. New tech may mean compliance specialists need to rethink existing risk management processes and carefully guide the implementation of AI into their operations; especially AI that’s used to generate material on behalf of the company.
Trend 4: Sustainability and environmental compliance
Sustainability’s become a key focus for businesses and regulators alike. Billionaire businessman, Anand Mahindra, advises that “Sustainability has to be a way of life to be a way of business.” And as public awareness about environmental issues grows, so too does the pressure on organisations to operate sustainably and to understand their impact on the planet.
This has led to an increase in environmental regulations and a corresponding need for environmental compliance. Businesses are expected more than ever before to play their part in protecting air, water, land, and wildlife. There are a whole host of environmental laws, regulations, standards and requirements and failure to comply with these can lead to legal penalties, and reputational damage, not to mention a loss of customer trust.
Some of the famous names guilty of sustainability breaches include Northumbrian Water – fined £375,000 for pumping raw sewage into the river Tyne - and Heineken, which “paid a large sum” for a pollution incident. Deutsche Bank (which owns an 80 per cent stake of DWS) agreed to pay a $25 million penalty after being found guilty of misleading statements surrounding its Environmental, Social and Corporate Governance (ESG) efforts, as well as AML infringements.
Trend 5: The shift towards proactive compliance
Consumer Compliance Outlook states, “Strong compliance programs are proactive. They promote consumer protection by preventing, self-identifying, and addressing compliance issues in a proactive manner.” In the past, many businesses adopted a reactive approach to compliance, addressing issues as they arose. However, this approach is no longer sufficient in today's complex regulatory environment. In fact, it’s rather risky!
Instead, businesses are now moving towards proactive compliance, which involves anticipating potential compliance issues and taking steps to prevent them. This shift is being driven by the increasing costs of non-compliance, as well as the realisation that proactive compliance can provide a competitive advantage.
The future of compliance will continue to be shaped by numerous factors, including evolving regulations, advances in technology, and changing societal expectations. To stay compliant and avoid the associated risks, it’s important to stay on top of these trends, continuously adapt your compliance strategies and drive a culture of compliance across your organisation. By doing so, you can turn compliance from a taxing obligation to a strategic asset.
At Apollo Solutions, we’re helping compliance specialists, and those who hire them, to stay ahead with the latest industry trends like these. After all, it’s essential for remaining competitive in this ever-changing landscape. Want to talk to a professional about furthering your compliance career, or strengthening your compliance team? We’re here to help. Contact us today, or have a look at our latest opportunities.