FinTech & Compliance Training

Compliance is becoming increasingly important for any FinTech company, and there are a variety of laws and regulations that businesses need to comply with. Add to that the fact that FinTech companies, in turn, have various internal policies in place and the compliance landscape becomes even more complex.

To navigate this landscape, both the employees and management of any company need to be aware of the specific laws, regulations and policies, how to apply them, and what non-compliance means for the company. This is especially important considering the sanctions that can be imposed if a company fails to comply.

And this is where effective compliance training comes in. It gives employees and managers the necessary knowledge and understanding of the laws and regulations that enable them to comply. With a proper compliance training strategy, companies can also ensure that their employees are always up-to-date with an ever-evolving regulatory landscape.

In this post, we’ll look at compliance training and why it’s important in more detail.

What is Compliance?

Although there’s no uniform definition for compliance, there are some definitions you can look at. So, one definition could be that compliance is the act or process of complying with a desire, demand, proposal, or regimen.

Another definition could be that compliance is conformity in fulfilling official requirements. Ultimately, compliance can be defined as adhering to specific requirements, standards, regulations, or policies regarding business.

No matter what definition you give to it, compliance is a vital part of your business. This is not only because you have to comply with specific regulations and legislation, but your staff also have to comply with your internal company policies.

Considering the above, you’ll get to deal with compliance in your company in two critical areas:

  • Regulatory compliance. This form of compliance specifically relates to how your company complies with various laws, regulations and guidelines. This could, for instance, include specific pieces of legislation like Anti-Money Laundering and Counter-Terrorist Financing, GDPR, Market Abuse Regulation, PSD2, MiFID II and MiFIR, just to name a few.
  • Corporate compliance. With this type of compliance, you ensure that all your employees comply with your company’s internal policies, procedures, and rules while, in turn, also complying with the regulations referred to above.

You have to make sure that you have procedures and practices in place for both regulatory and corporate compliance. If you fail to do this, you may face penalties like fines or legal action, which could even lead to prosecution and/or the closure of your business.

And that’s where compliance training plays a vital role.

What is Compliance Training?

In simple terms, compliance training is the process you use to ensure that all your employees and managers understand the relevant legislation, regulations and internal policies that your company needs to comply with. So, compliance training gives your employees an understanding of these pieces of legislation, regulations, and rules and shows them how and why they need to comply with them.

Based on the areas of compliance that you’ll need to focus on, you’ll typically give your employees and managers compliance training on the following aspects:

  • The relevant laws and regulations
  • Company procedures and policies
  • Your company’s code of conduct
  • Data security and privacy
  • Fraud detection and prevention
  • Anti-money laundering and counter-terrorist financing
  • Anti-bribery
  • Business ethics
  • Workplace discrimination
  • Sexual harassment
  • Workplace safety regulations
  • Workplace violence
  • Risk management
  • Workplace substance abuse
  • Diversity and inclusiveness in the workplace.

When employees and managers are aware of these, they know their responsibilities and boundaries, and compliance training allows them to work more productively. This, in turn, makes your company as a whole more productive and efficient. In addition, they’ll also know how to react to specific situations that arise during the ordinary course of business.

However, it would help if you keep in mind that compliance training differs from other types of training you may offer to your employees. So, unlike training on a specific platform or software application that relates only to that aspect, compliance training covers the broad range of elements mentioned above.

Also, due to the ever-evolving regulatory landscape, compliance training should be an ongoing effort to keep your employees and managers up-to-date with all the pieces of legislation and regulations, how they need to comply with them, and what the penalties are if they don’t.

Benefits of Compliance Training for Your Business:

When you’ve put proper compliance training processes in place, it has several benefits for your business. For one, when your compliance training includes the specific laws and regulations your employees need to comply with and the procedures they need to follow to ensure compliance, it helps you to reduce breaches of these laws, regulations, and policies.

Considering the harsh consequences that non-compliance can have on your company, it’s vital that you prevent breaches as far as possible.

Regarding anti-money laundering compliance only, fines have reached EUR 582 million in the first six months of 2020, beating the 2019 total of EUR 366 million, according to a study published by the financial consultancy firm Duff & Phelps.

To mention a couple of recent cases:

  •  At the beginning of March, ING was fined EUR 3 million for failures in anti-money laundering regulation
  • In April this year, the Maltese Financial Intelligence Analysis Unit fined Em@ney, an online bank, EUR 360.000 circa, because of breaches of the Prevention of Money Laundering Act.

Another benefit of compliance training is that if a breach occurs, your employees and managers will be well aware of the procedures to follow to rectify the violation. Ultimately, this reduces the reputational damage that your company can suffer and the possible sanctions that could be imposed.

The key takeaway is that proper compliance training helps your company stay in compliance with the relevant laws, regulations and policies. And with adequate compliance training processes in place, you’ll foster a culture of compliance where everyone understands its importance and makes it their responsibility to ensure that the company stays compliant.

Developing a Compliance Training Plan

Now that you know what compliance and compliance training are and how compliance training can benefit your company, it’s essential to look at how you can create a compliance training plan.

Typically, when developing your compliance training plan, you go through three different phases.

These are:
  • Collecting information and planning. During this first phase, you’ll collect data on where you need to give your employees compliance training. So, you should identify the specific areas where compulsory compliance training sessions are necessary, as well as the areas where they may not be. To do this, you’ll typically look at information relating to previous breaches, possible vulnerabilities your company faces which increases the risks, and similar breaches in the industry. Your compliance department or chief compliance officer can then create your compliance training plan based on this information. This plan will then dictate how and when the compliance training sessions will be conducted.
  • Implementation. Once the above planning is done, the training then moves to the next phase, implementation. When developing the compliance training plan, it is necessary to determine how the training will be delivered. This could, for instance, be through presentations, workshops, or practical sessions. Implementation could also include making the materials available to employees through the use of an internal e-course. During this phase, it’s also crucial to collect information relating to the training. So, this information could include things like attendance, employee feedback, or employees’ understanding and application of the principles improved.
  • Evaluating success. During the last phase of a compliance training plan, it’s necessary to assess the success of the training. You’ll need to look at the data gathered in the second phase during the implementation to do this. You’ll also need to look at how your company’s compliance improved to gauge whether the training was effective. Based on this information, you’ll then be able to make changes to the training plan to make it more effective as you start from the first phase again. Remember, compliance is an ongoing process, and you’ll go through this cycle constantly.

How Can You Improve Compliance Training?

Once you’ve developed your compliance training plan and start implementing it, there are also some other things you could do to improve your training efforts even more.

Involve Management

As stated above, to ensure proper compliance, you need to establish a culture of compliance in your company. When you do, employees will know what is expected of them, and they’ll make it their responsibility to make sure everyone else compliance with the laws, regulations and policies.

One of the best ways you can do this is by involving management in the training sessions.  It’s simple when your management visits training sessions and follows instructions; your employees will follow their example and be more motivated to comply. This, in turn, makes your training efforts more effective and productive.

Keep It Short

The relevant laws and regulations, and by implication, compliance, can be complex. This means that there’s often much information to take in. So, rather than hosting long training sessions, it’s far better to keep sessions shorter and involve more practical aspects on how the rules and regulations are applied.

In this way, you prevent information overload, and you ensure that the information provided during the training session stays with your employees.

Focus on Making Training Materials Clearer

Another way in which you can make it easier for your employees to grasp the material is by making your training materials clearer and more relevant. This is especially important when you provide your employees with self-study material.

So, when you give your employees study materials that are easy to read and understand, they will grasp the concepts better.

You’ll also have to ensure that the materials are relevant and up-to-date. If you provide training on laws and regulations that are no longer applicable, it serves no purpose.

Also, relating to materials, you should consider making materials available that your employees can use if they are uncertain about acting in a particular situation. In this way, you’ll ensure that the relevant information is always at hand to employees expected to comply with it.

Segment Your Employees

While all your employees have to be well-versed in all aspects relating to compliance, it often happens that some employees know more than others. This could, for instance, be the case where you onboard a new employee from another company or industry, and they’ll know very little about the relevant laws, regulations, or your internal policies.

Likewise, there may be certain aspects of your compliance processes that some employees don’t need to be aware of. So, it makes sense to segment your employees based on what they need to know and their current understanding of your compliance requirements.

This ensures that you don’t provide information to employees who already know it. Still, it also prevents a situation where someone who knows little about compliance is in a training session where complex issues are discussed.

Ultimately, by segmenting your employees based on their knowledge and understanding of compliance principles, you’ll make your compliance training more effective.

Consider Face-to-Face Sessions

In addition to segmenting employees based on their knowledge and understanding as described above, it may be helpful to use face-to-face training sessions for employees with challenges with learning or understanding the principles. Also, face-to-face interactions improve engagement and ensure that the material is delivered effectively.

Take Workload Into Account

You should keep in mind that your employees are busy, so you should schedule your training sessions when they have the time to attend the sessions and study the materials. If you don’t, and you plan training sessions during busy periods, employees won’t focus as much, and your training will be less effective.

Motivation

Your compliance training program will only be effective if employees actually attend the sessions and study the materials. And this is often a balancing act. So, you could make the training sessions compulsory with penalties if employees don’t attend them.

On the other hand, this keeps employees away from their jobs which can affect their productivity or income, as is the case with salespeople who lose out on commissions. This could lead to less motivation.

As a result, you’ll need to consider some other forms of motivation that you could use to ensure attendance at the sessions. This could, for example, include things like prizes or certificates.

E-mail Strategies

A simple way to improve your training and compliance is by using e-mail to send regular updates, training materials, and compliance news to your employees. By doing this, you’ll keep them up-to-date with the latest rules and regulations. This makes e-mail a very effective strategy in your ongoing compliance training efforts.

What About Outsourcing Your Compliance Training?

Outsourcing your company’s compliance training can save on costs, give you access to high-grade training material and help you keep up with the FinTech industry’s standards.

If one or more of the following scenarios apply to your business, most likely outsourcing your training programme could be of benefit:
  • My company spends a significant amount of time each year tracking the status of employee training
  • My business does not provide position-specific training
  • My organisation does not have an easy way of keeping up with regulatory changes as they happen to update our training program immediately to reflect those changes and remain in compliance
  • My training program is not presented in a format that is user-friendly to the employee.
Outsourcing compliance training: the benefits

Your company can benefit from the decision to outsource its compliance training in at least four different ways.

Focus on Your Competency

You run your business to execute its organisational mission, serve your customers, achieve your goals. Providing required training is not the reason for your business’ existence.

Manage Your Risk

As a business owner, your job is to manage risks, to minimise negative consequences for your company. Your compliance training programme itself is a source of risk and holds particular importance in the FinTech industry. If employees are not adequately trained, a series of adverse situations could lead to disaster.

Rely on Subject-Matter Experts

According to Malcolm Gladwell, 10.000 hours are required to become an expert at something. Delivering a compliance training programme to your employees requires an expert. This can be handled in-house, but it could be not the wisest idea to rely on one of your employees and ask him/her to become an expert in regulatory compliance and administer an effective training programme.

Reduce Your Costs
There are several cost-saving advantages to outsourcing your employee training program:
  • The money invested in the training programme gives you access to a team of specialised trainers
  • Outsourcing your training saves you money on the countless hours spent managing a traditional training program
  • Enlisting a training partner to help you with your training program will ensure that your training program is up-to-date and that you have all necessary documentation that you need to prove that all required employees have completed training. This will save you from potential finds assessed by being out of compliance.

The Bottom Line

Any company needs to comply with laws, regulations, and internal policies. Not doing so can lead to harsh penalties and fines, which could be devastating. This fact emphasizes the need for proper compliance training processes and strategies. In simple terms, you need to ensure that your company has effective training strategies in place to make sure your employees comply with the laws, regulations, and policies.

Hopefully, this post helped illustrate how you can develop a compliance training strategy, implement it, and some tips you can use to improve it.

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