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The key concepts for avoiding potential pitfalls and building a successful regulatory compliance framework within your organization. Regulatory compliance is a sometimes costly but always essential component of you company’s success.

FCPA regulations, OFAC sanctions, anti-money laundering rules, penalties for international arms trafficking, and a range of other federal and international regulations create a complicated web of requirements – one that must be successfully navigated to avoid costly repercussions such as:

  • Fines, fees, and prison sentences – Federal regulations can carry stiff monetary penalties. Even minimal fines can amount to hundreds of thousands of dollars, which can harshly impact the financial stability of small and medium-sized businesses. Implicated persons can also face significant prison terms, robbing companies of key executives.
  • Reputational damage – Companies found guilty of violating federal regulations can suffer serious, and sometimes irreversible, reputational damage. Government contracting firms are especially susceptible, as future revenue potential can quickly be erased as a result of non-compliance investigations.
  • Loss, fraud, and theft – US regulations are designed in part to prevent American firms from doing business with foreign nationals or companies that are untrustworthy or have ties to suspect organizations. Failing to identify and avoid these actors can open your company to loss, fraud, or outright theft of intellectual property or other corporate assets, in addition to the fines from US officials.
  • Shareholder backlash and stock price issues – Publicly-traded companies can suffer additional financial setbacks if shareholders or the stock market take a sufficiently negative view of non-compliance investigations and judgments. This can further weaken corporate finances at an already difficult time. Penalties, even when limited in scope, can severely disrupt or even end your business – making it essential to protect your company and your employees. Below are the key concepts for building a multifaceted, internal regulatory compliance framework to accomplish that goal.
  • Understand applicable regulations – Regulatory burdens are influenced by many factors, including industry, supply chain complexity, and overseas exposure. Investing time and money to develop a framework to fully understand applicable regulations is a crucial first step for any company seeking to mitigate risks. Use this knowledge to design risk-specific mitigation strategies and policies, keeping in mind that regulations can and do change.
  • Emphasize compliance through culture – Compliance requires vigilance by employees across your organization, so executives should also take the time to build a corporate culture that emphasizes compliance. Departments that may require special attention include accounting, purchasing, and sales, as these departments are more likely to contend with regulations in their work.
  • Consider hiring dedicated personnel or assigning roles – Some companies will require dedicated resources to monitor compliance – particularly those with complex supply chains, international networks, or business interests in certain industries. This may involve hiring a dedicated team at larger companies or providing training to specific personnel at smaller firms. In all cases, the goal should be to foster institutional knowledge.
  • Conduct due diligence research – Some regulations, such as federal anti-money laundering laws, will require background investigative research on individuals or companies to ensure compliance. This research must be thorough to be effective, so consider contracting to a third-party research provider if your company does not have adequate internal resources. The consequences of regulatory non-compliance, even when unintentional, can be severe making an internal regulatory compliance framework an essential component of your company’s long-term success.

Cipher’s expert analysts provide investigative due diligence and corporate risk mitigation services that uncover potential red flags and provide companies with the best information available to aid in their decision-making process. We offer a full suite of due diligence services to support client challenges related to channel checks, reputational due diligence, beneficial ownership analysis, compliance due diligence and overseas partner vetting. Cipher specializes in assisting clients to make better business decisions by leveraging our expertise in primary source intelligence and strategic analysis to uncover hidden pivotal knowledge crucial to making smarter, better-informed corporate choices. Clients make the decisions, but our experienced team of primary researchers, analysts, and investigators ensures these decisions are based on detailed foreknowledge of all relevant contributing factors, as well as a thorough understanding of opportunities and risks.