Within the financial world, new rules and regulations across regional, national and international borders are always forming and changing. Companies of all sizes are subject to a constantly evolving web of complex laws, along with any enforcement actions, reputational risk, and fines resulting from a lack of adherence. Reda Bedjaoui, CEO of Redbed Investments LLE, discusses why it is essential for economic entities to stay on top of regulatory compliance, in order to maintain and enhance the wellbeing of their respective businesses through both defensive and proactive measures.
Although the exact ramifications vary depending on the industry, regulatory compliance is best described as an organization’s following of all established laws, guidelines, and specifications that are relevant to its business. Any violations that are committed can result in legal punishment, which may include federal fines and restrictions of certain services. Two of the more prominent examples of financial regulations in the United States include the Sarbanes-Oxley (SOX) Act of 2002, and Dodd-Frank, which was implemented in 2010. International legislation such as the North American Free Trade Agreement (NAFTA) governs how trade is conducted between the U.S., Mexico, and Canada. All three of these involve detailed, extensive restrictions that must be closely followed in accordance.
Investment expert, Bedjaoui, points out that while the subject of finance regulations can involve a healthy amount of debate pertaining to their necessity, all can agree that full adherence is crucial to a company’s bottom line and reputation. “Regulatory compliance involves not only implementing business practices that line up with the initial regulations, but the constant monitoring of any tweaks and changes that may occur in the future as well,” Bedjaoui says. “If an institution strays from any regulations within their industry, even unintentionally, the consequences can be devastating to its profits, and their reputation at large.” For sensible companies, the issue of compliance is an essential one that requires significant attention and resources. “The largest financial institutions can spend over $1 billion a year on regulatory compliance and controls, while the average one dedicates 10-15 percent of its staff to this area,” according to a study cited by Forbes contributor Tom Groenfeldt.
Compliance should involve more than just being on the defensive while preventing any penalties, emphasizes Reda Bedjaoui. Adhering to the appropriate mandates and laws can proactively reveal untapped value, even as they work to assure full compliance. “Identifying any opportunities within regulations can have a substantial payoff,” Bedjaoui said. “These can be used to strengthen your company, whether it’s revising best practices, altering employee training programs, or benchmarking realistic growth in regards to your industry and size.”
Reda Bedjaoui is the CEO of Redbed Investments LLE. As a recognized expert in corporate governance, risk management, and regulatory compliance, he routinely manages commodity risk exposure while providing governance guidance to several prominent companies worldwide. Raised in Paris, France, Mr. Bedjaoui studied at Université de Montréal, where he earned a Bachelor in Law degree. He continued his education at Hague Academy of International Law in the Netherlands, and was later admitted to the Bar of Quebec, Canada (Montreal Section) in 1995. Reda honed his practice and knowledge of commercial law, corporate law, and international arbitration in positions at renowned law firms in both Montreal and Paris. He is an active member of the Society of Corporate Compliance & Ethics, a non-profit association that provides training, certification, networking, and other resources to over 5,800 regulatory compliance professionals.