{"id":16170,"date":"2022-11-18T07:17:05","date_gmt":"2022-11-18T12:17:05","guid":{"rendered":"https:\/\/lmshero.com\/?p=16170"},"modified":"2022-12-10T12:00:13","modified_gmt":"2022-12-10T17:00:13","slug":"compliance-department","status":"publish","type":"post","link":"https:\/\/lmshero.com\/compliance-department\/","title":{"rendered":"Compliance Department: Meaning, Functions & How To Create One"},"content":{"rendered":"\n

The term “compliance” practically means obeying or sticking to the rules that govern anything. While the modus operandi of a compliance department revolves around this theme, there is a lot more to compliance than just following orders.<\/p>\n\n\n\n

Unfortunately, only a few understand the entire concept of a compliance department and its significance. Some do not even know if such a department is easy to set up. This guide explains it all. <\/p>\n\n\n\n

What is a Compliance Department?<\/h2>\n\n\n
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\"Compliance-department-meaning-and-benefits-Lmshero\"<\/figure><\/div>\n\n\n

A compliance department is a section of any corporation that ensures that all activities within a company obey external and internal rules. <\/strong><\/p>\n\n\n\n

In financial institutions, the internal responsibilities of a compliance department center on protecting investors and making the market as fair and transparent as possible.<\/p>\n\n\n\n

Externally, this department ensures its institutions do not break the regulatory laws guiding customer communication, advertisement, conflict of interests<\/a>, and asset management. <\/p>\n\n\n\n

Hence, it is safe to say a good compliance record is one way to ensure all-round safety and an influx of consumers. This is because it brings about support and confidence. <\/p>\n\n\n\n

Types of Compliance<\/h2>\n\n\n\n

As far as organizations go, compliance departments deal with two major types of compliance \u2013 legal<\/strong> and ethical<\/strong>. <\/p>\n\n\n\n

Legal compliance means obeying the laws that guide a region in terms of activities such as labor, taxes, and more. <\/p>\n\n\n\n

Ethical compliance, on the other hand, is more of a subjective measure of what is morally right or wrong. It is the faction of compliance that handles activities such as insider trading<\/a>, and bribery, to name a few.<\/p>\n\n\n\n

5 Reasons You Need a Compliance Department<\/h2>\n\n\n\n

Compliance officers are professionals who occupy a compliance department. In the course of discussing why every organization should consider creating this department, both terms will be used interchangeably. <\/p>\n\n\n\n

A company may look good on the outside but bad on the inside or vice versa. This may be because they lack a compliance department to guide them. <\/p>\n\n\n\n

Let’s see some of the major reasons why you need one:<\/p>\n\n\n\n

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  1. A compliance department ensures your brand adheres to local and international regulations. In other words, it is the unit responsible for making sure a corporation avoids fine, legal suits, and reputation damage.<\/li>\n<\/ol>\n\n\n\n
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    1. Compliance officers stay up to date with the latest policies and procedures and communicate them to executive, mid-level, and entry-level employees. This ensures everyone is on the same page at all times.<\/li>\n<\/ol>\n\n\n\n
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      1. The department oversees outgoing materials like adverts and ensures they comply with regulatory policies.<\/li>\n<\/ol>\n\n\n\n
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        1. They conduct regular meetings with different departments, execute compliance audits and explain their findings to ensure unison. They also train employees to prevent a repeat of their mistakes.<\/li>\n<\/ol>\n\n\n\n
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          1. Compliance officers are great at assessing financial risks and creating strategies less prone to errors. This is also the go-to department for advice on the legal or ethical implications of any modification you wish to integrate into your business.<\/li>\n<\/ol>\n\n\n\n

            How to Create a Compliance Department<\/h2>\n\n\n\n

            It can be frustrating to keep getting fined or renowned for discrepancies as a company. As an executive or an HR, creating a compliance department can get you back on track.<\/p>\n\n\n\n

            In contrast to what most people think, creating one requires just a few easy steps:<\/p>\n\n\n\n

            1. Start from the top<\/h3>\n\n\n\n

            The most crucial step in creating a compliance department is getting a thumbs up from executives and the Board of Directors. A positive response from them means they are submitting to the program and the enforcement it issues.<\/p>\n\n\n\n

            Once the higher-ups agree, mid-level and entry-level employees are bound to also agree with compliance guidelines. This fosters the right culture at all levels and adds more value to the company.<\/p>\n\n\n\n

            2. Perform a compliance audit<\/h3>\n\n\n\n

            There is “no one size fits all” when it comes to creating a compliance program. The type of program that features in an organization depends on its specific need. <\/p>\n\n\n\n

            While such audits are usually performed by a third-party company, if there is no budget for that, you can make use of internal data in addressing relevant issues. A list of compliance issues you may have flawed includes:<\/p>\n\n\n\n