Compliance Framework
A compliance framework is a structured system of policies and controls ensuring adherence to laws and regulations.
Meaning in Practice
Financial institutions establish internal procedures, monitoring systems, and reporting structures to meet regulatory requirements. Compliance teams oversee anti-money laundering, sanctions screening, and conduct standards.
Why It Matters
A robust framework reduces legal, financial, and reputational risks. It ensures institutions operate within regulatory boundaries and maintain market credibility.
Market Impact
Strong compliance reduces the likelihood of fines and operational disruptions. Weak controls can result in significant penalties and loss of investor confidence.
Example
A bank implements automated transaction monitoring systems to detect suspicious activities and comply with regulatory reporting obligations.