No One Business Is Absolved From Regulatory Control - But The Climate Continues To Confuse

(Credit: No One Business Is Absolved From Regulatory Control - But The Climate Continues To Confuse) No One Business Is Absolved From Regulatory Control - But The Climate Continues To Confuse
September 28
10:12 PM 2021

There's a great deal of financial upheaval in the current global financial system, and that's reflected in the action being taken by international regulators. Bloomberg recently noted the lengths the Fed was going to in order to pursue compliance claims against German banking giants Deutsche Bank, and the SEC continues to scale up regulatory pursuit with regards to national and international companies and investors, with China next on the list. This is arguably in response to the degree of confusion that crypto, Brexit, coronavirus and the stimulus have caused - where can businesses look for clarity?

Independent expertise

The burden on small businesses when it comes to regulation is disproportionate. Analysis conducted by Chron identified that businesses with fewer than 20 employees pay over $7,000 to comply with federal law, yet companies with more than 500 paid only $5,000. Increasingly, businesses are turning to third parties and independent help. Compliance industry veterans MirrorWeb (https://www.mirrorweb.com/) highlight how having a unified compliance platform can assist businesses in ensuring they've ticked absolutely box within their field. However, vigilance is required - the use of third party systems to help a business maintain their regulatory controls does not mean that they will be unaccountable if, and when, issues do arise.

Big fines

The impact of this has clearly been seen this year. In early September, CNBC reported that WhatsApp had been fined a stunning $267 million for their role in breaching EU privacy roles. This is despite WhatsApp ostensibly using third-party systems owned by parent company Facebook. This shows that businesses big and small are subject to the same rules and that the buck ultimately stops with the business owner. This is especially important when it comes to financial regulatory control, and the SEC have been taking widespread action against those they consider taking action.

Cutting edge

The SEC are, in particular, extremely vigorous in their pursuit of rule breakers. The SEC website reported in late August that they had sanctioned 8 firms in relation to their non-compliance with cybersecurity policies. More recently, their action being taken against Activision-Blizzard in relation to the growing industry scandal the company is embroiled in hit the headlines. The SEC has a wide ranging stable of compliance rules and regulations that cannot be underestimated in their wider influence. Businesses can, and must, abide by these rules. It's likely that the larger businesses sanctioned by the SEC will, if they can continue trading, simply eat the fines. For small businesses, even a temporary dent in cash flow and liquidity can be the difference between life and death.

Don't take regulation lightly. The current landscape is confusing - there's so much discussion and variety in world events that nothing is quite certain. Take this on board, look to take a wide view of regulations, and do what you can to stick to them. At the very least this will demonstrate to the powers that be your willingness to engage. 

© 2021 VCPOST, All rights reserved. Do not reproduce without permission.


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