Regulation compliance
If you look at the history of regulations, they were created to protect – to protect businesses and consumers, to promote fairness and efficiency, and to encourage healthy competition.
Regulatory compliance exists to ensure that organizations not only comply with the legal statutes laid down by the local laws in a country but there are additional laws that pertain to specific industries that require additional rules in order to maintain those policies.
There are local, regional, and global laws for all organizations to follow and comply with, however, in order to maintain transparency both operationally and financially, organizations are adopting more consolidated sets of rules, policies, and compliances.
There are typically six types of regulations:
- Laws that impose burdens
- Laws that directly confer rights and/or provide protection
- Self-regulation
- Licensing bodies and inspectorates
- Economic regulators
- Regulators of public sector activities
In other words, regulations and compliance are where a set of rules and policies are set by a body that forms a part of external factors that are deemed necessary for businesses to comply with. These can be standardization, regulations, and legislation. These cannot be bypassed or ignored as they will invariably cause issues in the long run. For instance, non-compliance with the net-zero carbon footprint goal may preclude a business from entering a market in Singapore.
The topic of regulatory compliance is vast. For the purposes of understanding the challenges faced by businesses, there are three regulatory compliances that may specifically affect how businesses are able to function in specific regions and countries that would impact their IT solutions. Let’s check them out in the following subsections.
GDPR
The General Data Protection Regulation (GDPR) centers around privacy and security laws of individuals and consumers and it is seen as the toughest privacy and security law in the world. Although the laws apply to companies in the European Union (EU), its impact in terms of obligations organizations have is vast and covers businesses situated anywhere in the world, so long as they target or collect data related to people in the EU.
The consequences of ignoring GDPR can mean heavy fines for a business, which could result in reputational and financial damage or even exclusion from carrying out any business in the EU. Fines can reach tens of millions of euros.
The CCPA
The California Consumer Privacy Act (CCPA) was inspired by the work carried out in the EU for GDPR, and in the state of California, businesses’ privacy policies are required to include information on consumers’ privacy rights. The world’s largest and most successful electronic, big tech, financial services, and energy companies are headquartered in Silicon Valley, so where more appropriate to apply this act than the state where the impact is greatest?
Such laws, as described here, form the fundamental policy of businesses, and adherence is as essential as adhering to human rights laws pertaining to work and pay conditions.
Industry regulations
Industry regulations are rules and policies applied by an expert agency in that industry that govern the behavior of businesses. These regulations are supplemental to the fundamental laws applied across all businesses and organizations relating to privacy, security, and ordinary common law rules. In summary, these additional laws ensure there are no gaps in compliance with any laws governing industry-specific regulations.
Data residency
Whenever discussions are centered around business transformation, the subject of data residency is often not the most pressing issue to be addressed. However, it’s a topic that causes the most concern when it comes to compliance with regulatory and taxation laws and perhaps for policy reasons imposed by the business itself. This is when businesses specifically ask for their data to reside in certain geographical locations.
Another contrasting aspect is the consideration of data localization where the law of the country requires that data created within a certain territory stays within that territory. For example, Russian federal law dictates that both Russian and foreign companies that manage and collect the personal data of Russian citizens must have the data stored locally within the Russian Federation.