The consequences of violating a regulation that applies to your business can vary from a mild notice to comply, to fines, to the closing of the business, and even incarceration. Legal action from violations can come from government agencies in the form of investigations, cease and desist orders, lawsuits, and criminal charges.
However, consequences of compliance failures can come from other sources too. Employees can file lawsuits, whistleblowers can confidentially report companies to regulators, and even the public can get involved with anything from media outcries to formal lawsuits.
The Federal Financial Crimes Enforcement Network, lists thousands of cases involving regulatory violations and criminal activity in the financial sector. These cases overwhelmingly involve intentional, criminal behavior that results in significant fines and imprisonment.
The Bernie Madoff case
Yet, not all violations are deliberate or as clear-cut. Remember the Bernie Madoff case in 2009? He was the person behind the largest Ponzi scheme in history, worth an estimated $65 billion, and in 2009, was sentenced to 150 years in prison. He defrauded investors over decades and, in that time, funneled hundreds of millions of dollars through accounts at J.P. Morgan Chase.
After an extensive investigation, the FBI determined that J.P. Morgan Chase, while not criminally charged, was found to have failed to follow compliance guidelines in reporting suspicious financial activity. The company was ordered to pay $1.7 billion to the victims of the Madoff fraud.
Paychex, Inc, a leading provider of integrated human capital management solutions for payroll, benefits, human resources, and insurance services, published a list of the Top 10 Regulatory Issues Facing Businesses in 2022. The list includes new regulations applying to Workplace Safety, Cybersecurity, Paid Leave, and even Cannabis in the Workplace.
Businesses and laws are constantly evolving. As a corporate leader or business owner, it is important that you identify the laws and regulations applicable to your company and implement strict compliance systems. If you don’t know how to determine which regulations apply to you or are not certain how to maintain compliance, consider consulting with an attorney or law firm that specializes in regulatory compliance for your industry.