Compliance is made up of a number of key functions, each with varying degrees of importance. Maintenance and record-keeping, on the other hand, are two topics that are frequently under-discussed—perhaps due to a perceived lack of glamour.
As part of the foundations of an effective compliance and risk management framework, stringent maintenance and record-keeping measures are as perplexing as they are unwise.
Though new and emerging technologies have aided in the evolution of compliance, it is all too easy to overlook the fundamentals. Regtech's contribution to compliance is understandably popular, but it is easy to overlook the fact that compliance framework maintenance and record-keeping have long been essential. Both are critical in ensuring that businesses stay in compliance with regulations and avoid regulatory penalties, as well as in ensuring that customers' best interests are at the forefront of policymaking.
Maintenance is a broad term that refers to a variety of tasks. Maintenance is essential in an effective risk and compliance program, just as it is in a car to keep it from breaking down or machinery to keep it working properly. The following are some examples of areas where regular maintenance should be prioritized.
Companies should strive to provide customer-centric products that meet customers' needs, interests, goals, and expectations. Product maintenance is an important part of the product lifecycle. It is critical to maintain a product after it has been built and released to the market. Just because a product is suitable for its intended use at the time of its launch does not guarantee that it will remain so in the future.
Performing regular product reviews and maintenance throughout the product lifecycle ensures that the product continues to function properly. Failure to perform proper product maintenance can cause products to become outdated and vulnerable to risk, as well as provide poor customer service.
Policies/procedures: Reviewing and updating policies and procedures on a regular basis allows businesses to stay on top of the latest regulations, technological advancements, and industry best practices. Companies in high-risk or heavily regulated industries, such as banking, financial technology, healthcare/pharmaceuticals, gambling, and oil and gas, should pay special attention to policy reviews on a regular basis.
Policies and procedures should be living documents, with the core elements remaining constant while the operations change in response to industry and regulatory changes. It is easy to see policy and procedure reviews as a reactive activity given the sheer volume of tasks a compliance department must oversee; however, it is far better to practice proactive maintenance to avoid issues before they become a problem.
Training: Because regulations change frequently, it is critical that staff training be updated on a regular basis. Training should be reviewed on a regular basis to ensure that employees are meeting their legal obligations, whether it is mandatory, company-wide, or more specialized targeting a specific team, function, or department. Employees who are not properly trained may follow incorrect procedures, are unaware of potential threats or risks, or provide poor customer service, all of which can result in regulatory sanctions or reputational harm.
It is not only the content of the training that is important, but also the design of the training itself. We all know that training can be viewed as a check-box exercise with employees who are not always fully engaged. Regularly reviewing how training is delivered aids in maintaining high levels of engagement and improving information retention. Because of its interactive nature, e-learning has become a popular method of disseminating training content.
Maintenance and record-keeping are inextricably linked. Certain data must obviously be recorded and stored safely and securely, but it is also important to keep track of what was done and why when a policy was reviewed or maintained, or when an investigation was conducted.
Today's compliance and risk management is extremely complicated, and regulators, customers, shareholders, and other stakeholders are scrutinizing you like never before. Firms must implement an effective record-keeping process to ensure data and information is stored safely and is kept up to date in order to avoid potential regulatory enforcement action.
The entire company is involved in a robust record-keeping program. All employees, from entry level to senior management and board level, must be aware of their organization's record-keeping policies, as well as understand why storing data in a secure and reliable manner is critical.
It is the responsibility of compliance officers to ensure that their firm's record management policies are followed and that the policies are in line with any record retention schedules mandated by law.
Record-keeping, like maintenance, is a broad topic. The following are some important factors to consider:
- Employee training records to ensure they have passed all necessary training modules;
- Customer identification records;
- Compliance investigation logs;
- Disclosures to law enforcement/government agencies;
- Audit results and any follow-up actions;
-Policies and procedures, including a record of any amendments made;
- Reports from the whistleblowing hotline; and
- Documents evidencing any amendments to the compliance program.
A record-keeping or record-management system should be established to effectively maintain records. A record management system is used to store and track documents, policies, and procedures that are related to compliance. A good system will help ensure that regulatory requirements are met, that any documentary evidence is easily accessible, and that risk is minimized.
The most important takeaways
Do not overlook core compliance issues like ongoing maintenance and record-keeping in a world where technological advancements are changing the way we approach compliance.
Establish a thorough maintenance schedule, determining what needs to be checked and when it needs to be checked.
Develop a record-keeping program that specifies record retention schedules, what is required by law, the records that must be kept, and how frequently they must be reviewed.
Make a connection between the maintenance schedule and the record-keeping program to ensure that records are updated after a review. This should include what was reviewed, the findings, and any next steps, among other things.
Ascertain that all records are up to date in accordance with local and global requirements.
By fLEXI tEAM