Regulatory Compliance

Regulatory compliance is generally used to describe the policies and processes companies have in place to ensure that they are following laws, rules, and regulations that are applicable to their industry and jurisdiction. Since there is an extensive variety of federal, state, and local laws and regulations, Congress has created governmental units, bureaus, agencies, departments, commissions, and boards to carry out government regulatory needs, particularly:


  • to supervise the compliance of the private sector by requiring periodic reports or establishment of certain practices;
  • to provide additional guidance by enacting administrative rules and procedures; and
  • to enforce the law by bringing administrative and judicial proceedings.


Governmental agencies can bring investigations, audits, fines, penalties, injunctions, and other administrative and legal actions for noncompliance. The agencies have the authority to hold a public hearing, which is similar to court hearing, and to dispose the matter. If the parties do not agree with the outcome of such a hearing, judicial review is available by request of any involved party. 

The goal of the agencies’ work is to ensure that private economy is properly functioning, equal opportunities are available to all market participants, no fraudulent or improper practices are utilized by the private companies, interests and rights of the consumers are observed and protected, and that offered products and services are satisfactory both in quality and price. The U.S. regulatory process was established with the goal of setting standards, enforcement, and provision of the services to businesses. Different agencies have authority over a particular industry, and almost all industries are subject to certain compliance requirements. Some of the most popular regulated activities include commerce, import/export, health, agriculture, consumer services, education, welfare, labor, transportation, environment, workplace safety, financial services and transactions, corporate governance, communications, and many others. Accordingly, regular and proper compliance with the applicable laws and regulations is one of a business owner’s main concerns.


The overall success and profitability of the business depends on the implementation and compliance with the relevant regulations. Initially, it may seem overwhelming to comply with all applicable regulations, but there are certainly practical, time- and cost-effective ways to deal with it. Business owners should address regulatory issues before establishing a new enterprise and set the necessary procedures of compliance in place during the initial stages of business operations.    


The first step should be to identify the federal, state, and local laws and regulations that apply to the company’s commercial activities and have the greatest potential to affect its operations and profits.


The second step is, to develop a plan of obtaining all necessary government permits and approvals, based on previous assessments, and to accomplish other required filings within certain time deadlines.


The third step is to develop and implement written policies and mechanisms to regularly verify that the company is in compliance with all requirements. The goal should be to avoid spending too much time and money when performing these obligations on a time-to-time basis. Once a comprehensive regulatory compliance checklist is created, the business owner will have to periodically review it to make sure that all new changes are adopted, but having a predetermined structured compliance plan will save much repeated and overlapping effort for company owners and employees. 


An experienced business attorney can certain help you with all three of the above-stated matters.


The implementation of the comprehensive regulatory compliance mechanisms not only help the management to deal with regulatory matters, but it also demonstrates to the federal and state regulatory officials that the company takes regulatory compliance seriously. When determining how to deal with the companies facing allegations of regulatory noncompliance, enforcement officials are increasingly focused on whether the owners have established internal controls such as the above-mentioned checklist. The internal business policy may influence how much monitoring, oversight, and reporting the company may be subjected to, as well as the extent and nature of potential negative consequences (e.g. fines or injunctions) that a business enterprise and its principals may face.


Governmental agencies can investigate a company on their own initiative if they suspect any sort of noncompliance or if they receive a complaint, including an anonymous one. Some competitors may use the matter of regulatory compliance in bad faith as means of eliminating an active market participant or obtaining some other advantage. To prevent increased regulatory scrutiny, it is even more advantageous to establish a regulatory compliance program in advance and be prepared for any regulatory investigations that may arise. Once all documents are in place, it does not take a lot of time or employment resources to assemble and submit the required proof of compliance. Consequently, agency inquiries do not interrupt the regular course of business activities.

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