The sheer complexity and lack of uniformity found in regulatory regimes across the globe can be a serious headache for companies doing business internationally. When it comes to banking regulatory compliance and other sensitive issues, failure to keep up with all the necessary requirements can result in significant penalties.
Here are some challenges of multijurisdictional compliance globally and in the United States to be aware of.
International Compliance Issues
Operating internationally certainly comes with a variety of significant benefits, especially the potential for exponential growth and significant cost savings. But there’s one major caveat: expanding internationally without first understanding the nuances of each new jurisdiction’s regulations and laws can result in delays in resource and massive fines.
The truth is that every business operating in a cross-jurisdictional manner is going to deal with compliance issues. The key is to identify a level of risk that you are comfortable with and to work within those parameters.
For example, the European Union has relatively strict data privacy laws, and companies operating in this sphere must adhere to these regulations when handling employee and customer data. For U.S. firms, this may require separating domestic and European data in order to stay compliant with E.U. regulations.
As you would suspect, when it comes to compliance, the level of complexity rises as the number of markets increases. Companies with global ambitions must have an internal and external solution in place to identify local laws and regulations, and monitor compliance. Choosing the right solution boils down to attributes such as quality, comprehensiveness, cost, reach and local expertise.
This is more important than ever, as the number of regulatory actions continue to rise across the globe. Other nations have followed America’s lead in vigorously pursuing its regulatory prerogatives abroad.
In the United States, companies must navigate a variety of commerce-related rules and regulations to stay on the right side of domestic law. While operating internationally, U.S. firms must conform to domestic laws, in conjunction with the regulations of each new jurisdiction. Foreign firms operating in the United States, on the other hand, must comply with the rules of the U.S. International Trade Commission and other regulatory requirements.
The Bottom Line
Businesses with an eye on global expansion need to be aware of the significant compliance challenges every new market presents. When it comes to banking regulatory compliance, firms that have safeguard solutions in place will be able to avoid any regulatory sanctions and operate more smoothly and efficiently.