Today’s business world is quite different from that of even a decade ago, with the ever-changing landscape associated with business regulations and compliance issues demanding a full measure of care and attention. As a business owner, regardless of whether your business is small, medium or large, dealing with everything from keeping your business in the black, to ensuring that you meet every possible compliance relevant to your endeavour can be a rigorous undertaking.
With so many demands placed on you, it can be quite easy to accidentally overlook critical rules or regulations that have been placed on businesses by government regulators. While ensuring that your business remains profitable is understandable, being in breach of compliance relating to any number of legal requirements, could mean a potential shutdown or even dissolution of your business.
What is Corporate Compliance?
Corporate compliance is a broad umbrella term that is used to describe a wide range of standards, practices and laws. Adherence to each and every one of these laws or standards defines compliance, and is designed to protect several facets, including business clients, employees, shareholders, agents, customers and any other stakeholders associated with the enterprise.
Compliance can include (but is not exclusive to) the implementation of safety guidelines and practices in the workplace environment (health and safety), remuneration of employees (minimum wage etc), the administration of medical and/or pension funds, as well as a number of other facets that are part and parcel of corporate compliance.
Compliance also applies to the financial sector as well as any part of your business that deals with finance, sales, services, online sales or financing, investments, online gaming and so forth. Compliance in this instance can and does include Customer Due Diligence (CDD) requirements, KYC or Know Your Customer requirements, as well as Anti Money-Laundering (AML) and counter-terrorism funding regulations.
Consequences of Non-Compliance – The Big 5
The scope of compliance, particularly for businesses that operate on a global scale can be enormous and can depend on each territory or country that you deal in. Each of these will usually have their own set of compliancy requirements; with relevant consequences should any of them either not be met or breached. While very few intentionally breach or ignore compliancy requirements, the resulting consequences and punishments are often applied equally across the board.
The following potential consequences of non-compliance cover a lot of ground, and will give you a good idea of what you could be facing, should you be found to be non-compliant in any way.
Your business is only as good as your reputation, not just in your ability to deliver the goods, but also as far as your reputation of being above board and ethical is concerned. Failing to comply with one or more regulations or directives can result in you losing your hard-earned reputation, among you peers and your competitors alike. The loss of customers directly linked to a loss in reputation could spell the end for your business and potential partners will look elsewhere to invest and help business growth. Any criminal convictions resulting from non-compliance prosecutions could have a far longer lasting effect on your ability to do business again than any actual financial losses could.
Fines are usually the most common consequence of non-compliance, and are often used as a way to help businesses get back on track quickly. However, depending on the nature of the non-compliance finding, you or your business could face fines that run into thousands of pounds, enough to cause you to have to shut your business down. Other cost factors involved include legal costs including the costs of prosecution.
Being found to be non-compliant can often result in your business being shut down for a certain period of time (ranging from a few days to permanently) in order for you to correct whatever areas have been found to be non-compliant. However, while you are in the process of correcting these errors, your business is unable to continue production, which could ultimately result in you not being able to pay staff, meet agreements that you may have with customers or suppliers, and could even means the permanent closing of your business if your losses are too high to recover from.
As we mentioned in the previous point, having to shut your business down due to non-compliance issues could very well mean that your staff will have no other choice but to find employment elsewhere. Furthermore, if found guilty of non-compliance, especially where health and safety is concerned, attracting new staff could be next to impossible. After all, potential employees will be reluctant to work for a business that has been found to be non-compliant in areas that directly affect their wellbeing.
This is perhaps the most serious consequence of non-compliance of all. You could potentially face actual prison time depending on how severe your non-compliance is found to be. This can range from a few months (up to six) handed down by a Magistrate, or as much as two years if handed down by the Crown.