Compliance and Regulatory Issues
Expert-defined terms from the Professional Certificate in Financial Risk Management for Small Businesses course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Compliance and Regulatory Issues Glossary #
Compliance and Regulatory Issues Glossary
Audit Trail #
A chronological record that shows who has accessed a system and what actions they have taken. Audit trails are essential in compliance to ensure accountability and traceability.
AML (Anti #
Money Laundering): A set of regulations and procedures designed to prevent individuals or organizations from disguising the proceeds of illegal activities as legitimate income.
Basel III #
International regulatory framework for banks that aims to strengthen regulation, supervision, and risk management within the banking sector.
CCAR (Comprehensive Capital Analysis and Review) #
A regulatory framework introduced by the Federal Reserve to assess the capital adequacy of large U.S. banks and ensure they have enough capital to withstand economic downturns.
CFT (Combating the Financing of Terrorism) #
Measures designed to prevent terrorists from raising, moving, and using funds for their activities.
Compliance #
The act of adhering to rules, regulations, standards, and laws set by governing bodies. Compliance ensures that businesses operate within legal boundaries and ethical standards.
Compliance Risk #
The risk of legal penalties, fines, or other losses resulting from a failure to comply with laws, regulations, or industry standards.
Corporate Governance #
The system of rules, practices, and processes by which a company is directed and controlled. Good corporate governance ensures transparency, accountability, and ethical behavior.
CRS (Common Reporting Standard) #
An international standard for the automatic exchange of financial account information between tax authorities to combat tax evasion.
Cybersecurity #
The practice of protecting systems, networks, and programs from digital attacks. Cybersecurity is essential for compliance with data protection laws and safeguarding sensitive information.
DFS (Department of Financial Services) #
A regulatory body in New York that oversees the financial services industry to protect consumers and ensure the safety and soundness of financial institutions.
Due Diligence #
The investigation or exercise of care that a reasonable business or person is expected to take before entering into an agreement or contract with another party.
ESG (Environmental, Social, and Governance) #
Factors that companies consider when assessing their impact on society and the environment. ESG criteria are increasingly important in compliance and regulatory reporting.
FATCA (Foreign Account Tax Compliance Act) #
U.S. legislation aimed at combating tax evasion by U.S. persons holding investments in offshore accounts.
FERPA (Family Educational Rights and Privacy Act) #
A U.S. law that protects the privacy of student education records.
FinCEN (Financial Crimes Enforcement Network) #
A bureau of the U.S. Department of the Treasury responsible for combating money laundering and other financial crimes.
GDPR (General Data Protection Regulation) #
A regulation in the European Union that aims to protect the privacy and data of EU citizens. GDPR compliance is essential for businesses that collect or process personal data.
Internal Controls #
Policies and procedures implemented by an organization to ensure the reliability of financial reporting, compliance with laws and regulations, and the effectiveness and efficiency of operations.
KYC (Know Your Customer) #
The process of verifying the identity of customers to prevent fraud, money laundering, and terrorist financing.
Liquidity Risk #
The risk that a company may not be able to meet its short-term financial obligations due to a lack of liquid assets. Managing liquidity risk is essential for compliance with regulatory requirements.
MiFID II (Markets in Financial Instruments Directive II) #
A European Union regulation that aims to increase transparency and investor protection in financial markets.
OFAC (Office of Foreign Assets Control) #
A U.S. government agency that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.
PCI DSS (Payment Card Industry Data Security Standard) #
A set of security standards designed to ensure that all companies that accept, process, store, or transmit credit card information maintain a secure environment.
Regulatory Compliance #
The adherence to laws, rules, regulations, and guidelines set by regulatory bodies. Regulatory compliance helps protect the public, investors, and the overall economy.
Risk Management #
The process of identifying, assessing, and prioritizing risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and impact of unfortunate events.
Sarbanes #
Oxley Act: U.S. legislation that sets standards for all U.S. public company boards, management, and public accounting firms. It aims to protect investors by improving the accuracy and reliability of corporate disclosures.
SEC (Securities and Exchange Commission) #
A U.S. governmental agency that regulates the securities industry, enforces securities laws, and protects investors.
Solvency II #
A European Union directive that aims to harmonize the insurance regulatory environment across Europe to improve policyholder protection and financial stability.
SOX (Sarbanes #
Oxley Act): U.S. legislation that sets standards for all U.S. public company boards, management, and public accounting firms. It aims to protect investors by improving the accuracy and reliability of corporate disclosures.
Vendor Risk Management #
The process of ensuring that the use of third-party vendors does not create unacceptable risks to business operations or financial health.
Whistleblower #
An employee who reports their employer's misconduct to authorities, often related to regulatory violations, corruption, or fraud.