Compliance is literally translated as “fulfillment” or “pursuit. The term primarily refers to an organization’s compliance with financial standards and regulations established by government and financial regulators. It relates not only to one’s own company, but rather to the entire industry.

Why compliance?

Compliance within a company is important to create unity and prevent confusion. With rules, employees know where they stand and so they notice when someone steps out of line. Also, good compliance policies help a company achieve reliable operations. Because as soon as you don’t follow the regulations set up from above, you can be fined a large amount of money or even lose your license.

The purpose of compliance

The fact that compliance has received more attention in the Netherlands in recent years is partly due to the consolidation of European directives into national legislation. This has significantly increased the number of regulations for Dutch companies. And this in turn is pushing compliance higher up the agenda. And that is good news: clear codes of conduct and rules can prevent financial disasters, terrorist financing, fraud and money laundering. This ensures more openness and integrity within an organization.

Risks to compliance

So compliance seems to have mostly benefits. But beware: sometimes compliance comes with unexpected consequences. If, for example, the scope of certain European directives is not properly or belatedly determined, the Dutch court suddenly sees compliance with those European rules in the Netherlands as a violation.
Also, the large amount of rules and laws can cause a company’s internal codes of conduct to be lost sight of. To avoid such risks as much as possible, more and more companies are therefore choosing to work with a compliance officer.

What financial standards and rules apply?

Compliance is about complying with financial standards and rules that apply to a business. So it is important to know exactly what standards and regulations apply to your business. One of the most important financial standards that companies must comply with is the Money Laundering and Terrorist Financing Prevention Act (Wwft). This law requires companies to conduct client investigations and report suspicious transactions to FIU Netherlands. There are also other financial regulations that may be relevant to a company, such as the European Privacy Regulation (AVG) and various tax regulations. It may also be necessary to comply with certain sector-specific regulations. It is therefore essential that companies stay well informed of all relevant financial standards and regulations. This can be done, for example, by using professional literature or by collaborating with experts in the field. By taking compliance seriously, you ensure that your company not only meets legal requirements, but also operates ethically.

How can companies apply compliance?

Compliance is an important part of business and finance. It ensures that companies meet all legal standards and regulations set by government and financial institutions. But how can companies apply compliance in their day-to-day operations? First, companies must be aware of which financial standards and regulations apply to their industry and operations. This often requires extensive knowledge, training and guidance to understand what it takes to remain compliant. Companies must also have internal control procedures in place to ensure compliance. This means, for example, that they must have well-organized administrative processes for keeping books, invoices, reports, audits, etc. Hiring or training specialized staff can help implement compliance standards in an organization. These staff can be made responsible for monitoring activities such as risk management, identifying weaknesses within the organization or incident handling. Finally, every aspect should be monitored regarding the application of these standards: this includes supplier, customer or other collaboration agreements that ensure that each party is compliant with the same requirements.