COMPLIANCE GENERAL OVERVIEW
In today’s global marketplace, companies are greatly expanding the scope and complexity of their activities. They face an ever changing and increasingly complex regulatory environment, placing a greater emphasis on compliance. Failure to comply with regulations can result in significant expenses, including potential large fines and other penalties, as well as the associated negative impact to both brand and reputation. Below is a high legal overview of the core elements of compliance anyone doing business in the United Arab Emirates should be aware of.
1. What does compliance mean?
Compliance means adherence to, or conformance with rules, laws, standards and policies and any other baseline obligations set forth by an entity. This includes, actively and passively complying with all applicable laws, regulations, and compliance requirements across the concerned organization. Depending on the industry or sector concerned, or in larger scale firms, depending on the department or business unit, compliance is managed to tackle different risks that could potentially hinder – and in extreme situations, shut down – a business, give rise to litigation or even criminal prosecution.
2. Are all industries concerned?
Yes. Every legal entity regardless of size, scale, complexity of business model, industry or sector must understand what compliance risk management entails in their own business universe.
3. How does compliance impact UAE business environment?
The UAE environment is resultantly business friendly, with numerous advantages when it comes to setting up and running a business. Alongside domestic (mainland) registration options, there are more than 30 free zones to choose from, with each such option coming with its specific rules and regulations, on top of federal laws applicable throughout the country. The UAE abides by international standards; offences like money laundering are criminalized.
4. What is the difference between “regulated” and “supervised”?
Firms which may not think of their activity as being subject to mandatory compliance or third party assurances such as audit are more exposed to the risk of breaching laws, rules and standards. The concept of “unregulated” entity is not one businesses should rely on. Risks of various orders may be faced by legal entities considering themselves “unregulated”, and making business decisions underpinned on that assumption.
5. Is compliance only about financial services?
The word “compliance” is intimately connected with financial services; but compliance extends far beyond this field. Every The word “compliance” is intimately connected with financial services; but compliance extends far beyond this field.
Every industry or sector has laws that govern its business activities and thus the potential of being in a regulatory perimeter, litigation or (perceived low) standards letdowns exists. Business owners and managers often mistakenly assume that compliance is about dealing or preventing illegal conduct.
This assumption is inaccurate: compliance casts its net much wider. It obviously encompasses subject matters widely relayed by the media (e.g. anti-money laundering, anti-bribery and fraud). But the importance of privacy and data protection,
imports and exports and trade, government contracting, complaint management, use of social media, fair competition, health and safety, conflicts of interest, records management, business continuity, employment and labour, and even more broadly ethical behavior and adherence to corporate values, which should not be underestimated.
6. How can firms manage compliance risk?
When considering how to manage compliance risk, firms need to assess their status quo versus industry/sectorial peers of the same size, scale (and geographical span where possible). This involves assessing what frameworks or controls peers that are known for having best practice compliance standards have in place but also to understand from a functional viewpoint how compliance risk is managed. To manage this risk does not necessarily entail only hiring a compliance officer, which is by no means a guarantee that your business is compliant. The most cost effective way of managing compliance is by imprinting the desirable
behaviors top to bottom across an organization when setting the tone.
7. Why compliance is good for your business?
Doing the right thing is not always easy; but when compliance is permanently part of your strategic agenda, it can trigger incremental value to the wider organization and ensure your organization not only “walks the line” but has a sustainable and resilient business model, capable of turning the “doing the right thing” into a tangible competitive advantage, by doing a better job of managing compliance-related risks than competitors.
Who we are and how we can help
Rethink is a boutique accounting, audit, advisory, compliance and tax advisory firm with offices in Dubai and Abu Dhabi (ADGM), focused on providing entrepreneurial businesses of varying sizes with timely, proactive, and customized business solutions from startup and early development to the latest stages of a business lifecycle.
We offer tailored regulatory expertise and focus in guiding clients to reduce the risk of non-compliance across a wide range of compliance services and regulatory advice. While we focus on compliance consultancy services including advisory, training and process improvement, we do not just tell you what to do, we give you practical ways to make things work for your business.