What Is the Current State of Regulation around the Globe - Essay Example

WHAT IS THE CURRENT STATE OF REGULATION AROUND THE GLOBE? WHO IS AHEAD? Student’s Name Code + Course Name Professor University City/State Date What is the current state of regulation around the globe? Who is ahead? Abstract There are all sorts of financial systems around the world, from stable to fragile ones. Many studies around the world have proven that financial systems that function well contribute highly on the economic growth because funds are allocated to the highly productive investments. In order to gain a good and functional system of finance we require financial reforms and regulations. Banking systems that are stable have proven substantial development around the globe. Ineffective financial systems means that there are no funds available or simply funds needed for investments are not available hence there will be a economic growth disruptions. Economic development disruptions call for financial reforms and regulations from the World Bank and International Monetary Fund (IMF) which are international organizations. Today, all organizations compliance staff should always track and remain up to date with the ever changing regulations. Trends and the current state of regulation Firms are creating and adapting to a culture of compliance to regulations. When an organization creates a culture of compliance to financial regulations, profitability, productivity, engagement of employees and risk reduction is enhanced. Studies show that over 57% of organizations surveyed globally have managed to come up with a culture whereby everyone adapts to the culture of adherence to regulations. There are advantages of regulations adherence in the long-run, such as building a positive reputation of the firm, enhancing the brand image of the organization, and avoiding fines that come with not complying to regulations. In order to build and maintain a stable regulations compliance culture, there are certain steps that need to be followed. First, the top management, that is the board of directors, chief executive officers should act as the lead in controlling and communicating to the subordinates, train employees regularly on regulatory policies and procedures, and finally assess the policies, evaluate the impact, and check on changes and improvements. Investing in operations In 2015, more than 70% of organizations predicted an increase in the cost of hiring regulatory compliance officials due to the rise in their demand in the recent years. This increase in spending has also been evidenced in 2016, more than 60% in North America, more than 75% in Europe, and more than 80% in the Middle East. According to these statistics, it is quite evident that more than 75% of compliance leaders expect a significant rise in the cost of these professionals. On the other hand, organizations expect to increase spending on these resources, which is the time and staff so that they can invest on processing and adapting to relevant regulations. These steps should be taken in order to get good results from compliance regulations. Invest in professionals that are skilled in order to enhance risk moderation, avail these teams with the relevant tools that track global changes in regulations, train the officials with regular updated programs, embrace technology in the regulatory compliance processes, and build a culture of loyalty towards regulations compliances. Keeping on track with the ever-changing regulatory sector Regulators are widening their operations globally, that is regionally, nationally, and internationally in the verge to enhance economic development. In 2015, we have seen a significant increase in initiatives in regulations. Globally, we have seen base III, in the European Union, we have the Directive (AIFMD), Alternative Investment Fund Manager’s, European Market Infrastructure Regulation (EMIR), Foreign Corrupt Practices Act (FCPA), Data Protection Directive, Markets In Financial Instruments Directive II (MiFID II) and Solvency II, in Australia we have the Future of Financial Advice, in the United Kingdom we have the Senior Managers and Certification Regime, and finally we have the Foreign Account Tax Compliance (FATCA) in the United States. Personal liability of regulatory compliance was expected to increase in 2016 and the following years. In order for a firm to stay in pace with the regulatory changes, it has to create a system that can many sources and changes of regulations, come up with a platform to communicate any changes or developments, and develop a way to blend in new regulations in the existing program. There were more than 50,000 compliance and regulatory updates in 2015. The risk of Third Party More than three quarters of the 428 cases of corruption that were analyzed by the Foreign Bribery Report of the intergovernmental were third party involved. More than 6000 names of individuals an companies of corruption came from third parties, the violators were fined more than $20 million and given a sentence of more than 30 years, in turn, the US securities and exchange earned a commission of more than $115 million. In order to properly manage third party framework, firms have to develop a program to monitor third party risk, put the policies in place such that they correlate in business operations, weed out potential risks to maintain sustainability and legitimacy, evaluate the results and make necessary changes, keep an eye and report any risks at all stages, take disciplinary actions to violators, and educate employees on potential violations and consequences. Whistleblower encouragement In 2015 the US SEC paid more than $36 million to whistleblowers as rewards. In the United States, OSHA put down guidelines in which organizations would use to come up with programs for whistle blowing that are effective, in the United Kingdom, PRA and FCA issued new protection strategies for whistleblowers, in Canada, new protection strategies for whistleblowers were proposed. The following steps will enable organizations to enhance and improve protection rights to whistleblowers. First, it is important to review the existing initiatives for whistleblowers in the organization, come up with a policy that encourages speaking up in the organization, a management system, and a support desk to take reports and help out, create a training program that discourages whistle blowing retaliation and informs employees about the protection provided to whistleblowers. The bottom line is that most organizations globally are trying to comply with the set regulations because of the benefits that come with this compliance. It is important that firms stay up to date with the current regulatory policies and procedures, training of employees on regulations compliance and its importance will create a culture of compliance that will enhance organizational growth and economic development in the long-run. References Allen, F., and Douglas Gale. 2000. Comparing financial systems. Cambridge, Mass.: MIT Press Bandiera, O., G. Caprio, P. Honohan, and F. Schiantarelli. 2000. Does financial reform raise or reduce savings? Review of Economics and Statistics 82 (2): 239–63 Camdessus, M. 1997. The challenges of a sound banking system. In Banking soundness and monetary policy, ed. C. Charles Enoch and J. H. Green, 535–39. Washington, D.C.: International Monetary Fund. Deininger, K., and L. Squire. 1996. A new data set on measuring income inequality. World Bank Economic Review 10 (3): 565–92. IMF Global Financial Stability Report, A Report on Market Developments and Issues. (2016). Imf.org. Retrieved 23 June 2016, from https://www.imf.org/external/pubs/ft/gfsr/ Top 5 Compliance Trends around the Globe in 2016 | Thomson Reuters Risk Management Solutions. (2016). Risk.thomsonreuters.com. Retrieved 23 June 2016, from https://risk.thomsonreuters.com/infographic/top-5-compliance-trends-around-globe-2016# Read More