Regulatory compliance 101: Definition, requirements & solutions
In Diligent’s 2024 Director Confidence Index, 62% of public company board members said the regulatory environment is affecting their company’s ability to execute on strategy. That makes regulatory compliance — the ability to comply with industry and sector-specific regulations — a hot topic among both boards and regulatory bodies.
This ever-growing regulatory burden creates a continuous challenge for businesses striving to comply; the Ukraine crisis and the Israel-Palestine War, sanctions on Russia and Iran and gaps in generative AI policy are very live examples of the unexpected threats that can shift the demands of compliance and risk management.
To help, this article will explain:
- What regulatory compliance is and why it's important
- The benefits of regulatory compliance
- Types of regulations across industries
- Global regulatory compliance requirements in the U.S., the E.U. and by sector
- The consequences of non-compliance
- Regulatory compliance plans and reporting
- How to ensure compliance with regulations
- The growing role of technology and AI in regulatory compliance
What is regulatory compliance?
Regulatory compliance definition: The policies and practices corporations use to comply with external mandates, usually from governing bodies like the Securities and Exchange Commission (SEC). In other words, regulatory compliance is the process of ensuring that a company or organization follows all relevant laws, regulations and industry standards to reduce legal risk, maintain operational integrity and build stakeholder trust.
While corporate compliance refers to a firm’s ability to follow its own rules and policies or to adhere to industry norms and best practices, regulatory compliance is a mandatory requirement with significant potential penalties.
Regulatory is multi-faceted and can mean different things, not just for different businesses but for different elements of a single business.
- It can relate to your operations — the fundamental ways you run your business.
- It can mean that your marketing collateral and customer communications must meet certain standards.
- It also means that you must prove that the processes you have followed meet expectations.
It’s not just the result that counts when it comes to regulatory compliance; the importance of compliance monitoring cannot be underestimated. Marketing collateral, for instance, should have a clear audit trail of reviews and approvals by someone designated to undertake compliance duties at your firm. Having comprehensive compliance reports to evidence your processes and checks is essential if you are ever subject to any form of external audit or compliance monitoring.
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Registor nowWhy is regulatory compliance important?
Compliance with regulatory requirements matters on many levels. An organization that meets its regulatory obligations signals to customers and stakeholders that it operates ethically, with integrity, and within the laws and rules that govern it.
Additionally, the volume of laws, regulations, industry standards and requirements has risen exponentially over recent years. Simply put, regulation now touches every sector and every area of business in today’s corporate landscape.
As well as increasing the number of requirements you need to meet, the constantly changing nature of regulation makes it more important than ever that your company maintains a robust compliance program. Keeping track of current requirements and ensuring organizational compliance is a significant challenge. It’s certainly not an area for complacency.
The benefits of regulatory compliance
Corporations that take regulatory compliance seriously:
- Strengthen their reputation: Regulatory compliance is a fundamental building block for your brand and corporate reputation. Trust is a huge consideration for successful brands; customers and clients choose to buy from companies they have faith in. An increasing focus on ethics, provenance and governance makes regulatory compliance an increasingly important element of corporate brand equity.
- Protect their bottom line: Businesses can cut costs on both sides of regulatory compliance. This includes the costs of penalties and remediation, the costs of rectifying any inadequate processes, the costs of recalling non-compliant products or promotions, the indirect costs of the time taken on these actions, and the opportunity cost of lost sales due to reputational issues.
- Safeguard stakeholders: Most regulations are designed to protect either your business, your employees, your customers or, in some cases, the public at large. Any failings put one or more of these at risk.
- Reduce risk: As businesses’ digital transformations accelerate, the risks they face and compliance obligations they need to meet amplify, too: issues like data protection and cybersecurity come to the fore. Noncompliance with best practices and regulations leaves companies wide open to data and security breaches.
Regulatory compliance risk
Regulatory compliance risk refers to the potential penalties an organization may face if it fails to adhere to laws, regulations or industry standards. This type of risk is especially critical in highly regulated industries like finance, healthcare and energy, where non-compliance can lead to audits, fines or operational shutdowns.
Managing regulatory compliance risk is crucial for several reasons:
- Avoiding legal and financial penalties: Non-compliance can lead to significant fines, reputational damage and even criminal charges.
- Protecting stakeholders: Compliance safeguards the interests of customers, employees, investors and the broader community.
- Building trust and reputation: A commitment to compliance fosters trust and enhances an organization’s reputation as a responsible and ethical entity.
- Gaining a competitive edge: By proactively complying with regulations, organizations can avoid disruptions and establish themselves as reliable and trustworthy partners.
Types of regulations to comply with across industries
All firms have to adhere to some degree of regulatory action. Regulations may, for instance, emphasize the safety of their operations or ensure that their hiring policies follow requirements designed to ensure equal opportunities.
The specific regulations applicable to an organization depend on its industry, size, location, and activities. Some of the most common industry regulatory compliance mandates are:
Banking and financial regulatory compliance
These regulations relate to how corporations manage the U.S. financial services sector. You might be governed by one of the many agencies that regulate the industry, including the Securities and Exchange Commission (SEC), the Federal Reserve, the Financial Industry Regulatory Authority (FINRA) and the Office of the Comptroller of the Currency (OCC).
These bodies oversee everything from consumer protection and anti-money laundering (AML) to capital requirements and risk management. In the U.K., the Financial Conduct Authority (FCA) plays a similar role, regulating how financial services firms treat customers and manage risk.
Healthcare regulatory compliance
Ensures that medical providers, hospitals and health systems operate in ways that safeguard patient health and privacy. The most well-known requirement in the U.S. is the Health Insurance Portability and Accountability Act (HIPAA), which protects personal health information (PHI).
Additional regulations include HITECH (promoting secure electronic health records), the Center for Medicaid/Medicare Services rules and the Joint Commission standards for healthcare organizations. Compliance failures can result in fines, data breaches or loss of accreditation.
Pharmaceutical industry regulatory compliance
Pharmaceutical compliance governs the research, development, manufacturing, marketing and post-market surveillance of drugs and medical devices. In the U.S., the Food and Drug Administration (FDA) enforces strict rules under the Federal Food, Drug and Cosmetic Act to keep products safe, effective and accurately labeled.
Key global compliance concerns include the Good Manufacturing Practices (GMP), clinical trial ethics, pharmacovigilance and adverse event reporting. In the EU, the European Medicines Agency (EMA) serves a similar regulatory function.
Food industry regulatory compliance
Food industry compliance promotes the safety, integrity and proper labeling of food products. The FDA and the U.S. Department of Agriculture (USDA) regulate different parts of the food supply chain, overseeing everything from ingredient sourcing and hygiene practices to nutritional labeling and food recalls.
Compliance with Hazard Analysis and Critical Control Points (HACCP) standards is also essential for food manufacturers to mitigate contamination risks and meet export requirements.
Automotive industry regulatory compliance
Automotive compliance encompasses vehicle safety, emissions and manufacturing standards. In the U.S., the National Highway Traffic Safety Administration (NHTSA) enforces regulations under the Federal Motor Vehicle Safety Standards (FMVSS)
Automakers must also comply with environmental laws, such as those set by the Environmental Protection Agency (EPA), particularly regarding fuel economy and emissions. Globally, automakers face additional rules related to cybersecurity, autonomous driving technology and sustainability reporting.
Insurance industry regulatory compliance
The insurance industry is subject to federal and state regulations that govern solvency, rate-setting, consumer protection and claims handling. In the U.S., state insurance departments are the primary regulators, supported by national bodies like the National Association of Insurance Commissioners (NAIC).
Insurers must comply with rules related to anti-discrimination, risk-based capital requirements and reinsurance agreements. Internationally, firms may also be subject to Solvency II and other global standards.
Cybersecurity compliance
Cybersecurity compliance is a concern across industries. In fact, 68% of directors find cybersecurity and data privacy regulations challenging, the highest of any other type of compliance. Most cybersecurity regulations are designed to protect digital systems, networks and sensitive data from cyber threats.
IPAA and the U.S. Payment Card Industry Data Security Standard (PCI DSS), which regulates transaction data, may also fall into this category. Additional frameworks include NIST, SOC 2 and ISO/IEC 27001, which are often used in regulated industries or mandated by clients and partners. Failure to meet cybersecurity compliance can lead to breaches, lawsuits and reputational damage.
ESG compliance
In the U.S. and the EU, regulators increasingly hold firms accountable for their environmental, social and governance (ESG) impact. There is a growing body of laws and reporting standards that require transparency and accountability.
The EU’s Corporate Sustainability Reporting Directive (CSRD) and the EU taxonomy mandate disclosures on carbon emissions, diversity metrics and ethical supply chains. In the U.S., the SEC has also proposed new climate-related disclosure rules. ESG compliance, as a result, now intersects with investor expectations, reputation management and long-term risk mitigation.
Examples of regulatory compliance
Regulatory compliance plays out across industries in distinct ways that shape how organizations operate, innovate and earn public trust. Some examples of regulatory compliance requirements specific to particular sectors include:
Banking and financial services
After the 2008 financial crisis, global financial institutions were forced to reckon with the consequences of weak oversight. Today, banks and investment firms must follow rigorous rules from agencies like the SEC, Federal Reserve and FINRA to prevent fraud, strengthen transparency and protect consumers.
For example, Know Your Customer (KYC) and AML rules require financial institutions to verify client identities and monitor suspicious activity, helping to prevent crimes like money laundering and terrorist financing.
Healthcare
When patients are admitted to the hospital, they expect their personal information to be treated with care. HIPAA protects those expectations, requiring providers to handle sensitive data with stringent confidentiality. Hospitals and healthcare providers must take steps like encrypting health records and implementing access controls to preserve patient trust and avoid costly breaches.
Pharmaceutical industry
Before a new drug reaches a pharmacy shelf, it must undergo years of clinical trials, rigorous testing and regulatory review. The FDA enforces strict protocols, including GMP, to ensure every pill or injection is safe, effective and properly labeled. These are life-saving guardrails that promote human safety.
Insurance industry
A network of regulations bolsters every insurance policy and its ability to protect policyholders from fraud, insolvency and discrimination. State regulators — guided by models from the NAIC — monitor how insurers set rates, handle claims and manage risk. These rules enable people to count on the coverage they’ve paid for when the worst happens, such as a house fire or a car accident.
Regulatory compliance requirements
One challenge with regulatory compliance is the constant evolution of your obligations; the meaning of regulatory compliance is ever-changing, and the regulations to comply with vary by industry, sector and location. Here’s what you need to know about the current U.S. regulatory landscape, in particular:
Regulatory compliance in the U.S.
Some predicted changes to U.S. regulatory compliance in 2025 include:
- Increased focus on consumer protection in financial services: The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) have intensified their focus on consumer protection. This includes scrutiny around digital asset platforms and fintech companies to promote transparency and fairness in consumer interactions. State agencies have a more prominent role, reflecting a broader move toward decentralized regulation.
- Data security incident reporting: Since 2022, federal banking regulations have required banks and other regulated entities to report data security incidents within 36 hours. This requirement aims to enhance the banking sector's resilience against cyber threats.
- Regulation of digital assets: The regulation of digital assets is constantly evolving as policymakers and regulators seek to create policies for these new currencies. The proposed GENIUS Act, for example, introduces stringent measures for stablecoin issuers, including mandatory audits and anti-money laundering protocols. Meanwhile, the Digital Asset Market Clarity Act was introduced in the U.S. House of Representatives to delineate regulatory responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC) regarding the oversight of digital assets.
- Climate-related disclosure regulations: In March 2025, the SEC voted to cease its defense of its long-anticipated climate disclosure rules, effectively halting the implementation of these requirements at the federal level. This decision reflects a significant change in the regulatory stance on environmental disclosures.
Global regulatory compliance
Some jurisdictions worldwide have a similar regulatory landscape to the U.S., while others have taken swifter and more decisive action on emerging issues, like AI. Here are the regulations to know in key global markets:
Regulatory compliance in the E.U.
Similarly, the EU’s regulatory playing field is becoming more crowded:
- The Digital Services Act (DSA): Applicable to all platforms since April 2024, the act charges Big Tech firms to remove illegal content from their sites or face financial penalties of up to 6% of global annual revenue. All companies within its scope must publish annual transparency reports detailing content moderation practices and risk assessments. The EU is also set to launch an age-verification app in July 2025 to enhance minors’ safety, aligning with the DSA’s objectives.
- Corporate Sustainability Due Diligence Directive (CSDDD): The CSDD mandates companies to identify and address adverse human rights and environmental impacts in their operations and supply chains as of July 2024. However, in April 2025, the EU agreed to a one-year delay in implementation, pushing the deadline for member states to implement the directive as national law to July 2026.
- Corporate Sustainability Reporting Directive (CSRD): The CSRD expands the scope of sustainability reporting to more companies and introduces more detailed disclosure requirements. In April 2025, the European Parliament voted to delay the implementation of the CSRD, with large companies now expected to begin reporting in 2028 and listed SMEs in 2029. Additionally, the European Commission’s “Omnibus I” simplification package aims to reduce reporting burdens by extending effective dates and simplifying requirements.
- Sustainable finance and ESG disclosures: While not formal regulations, the EU continues to refine its sustainable finance frameworks. This includes amendments to the Disclosure, Climate and Environmental Delegated Acts, planned for adoption in 2025 and a review of screening criteria in early 2026. The European Financial Reporting Advisory Group (EFRAG) is also seeking feedback on simplifying sustainability reporting standards to reduce the reporting burden on companies.
- The European Green New Deal: This initiative charges corporations to help Europe become the first net-neutral continent by 2050. This includes efforts like measuring greenhouse gas (GHG) emissions.
Regulatory compliance in the Asia-Pacific (APAC) region
Both Australia and Japan are actively evolving their regulatory frameworks to address emerging challenges in financial integrity, consumer protection and sustainability:
- Climate-related financial disclosures in Australia: Since January 2025, large Australian companies must disclose climate-related financial risks and opportunities. This initiative aligns with international standards and aims to provide transparency to investors and stakeholders. The phased implementation will eventually encompass approximately 1,800 companies over three years.
- Australian AML enforcement: The Australian Transaction Reports and Analysis Centre (AUSTRAC) has intensified its scrutiny of the gambling sector. In 2025, independent audits were ordered for casinos in Townsville and Darwin to assess compliance with AML and counter-terrorism financing protocols. This move underscores AUSTRAC’s commitment to combating financial crime across all regions.
- Japan’s Product Safety Act: Effective December 2025, Japan’s Product Safety Act will impose stricter obligations on manufacturers and importers, including overseas entities selling directly to Japanese consumers. Key provisions include mandatory reporting of serious product accidents within 10 days and the requirement for a domestic representative for foreign sellers.
- Sustainability Disclosure Standards (SSBJ Standards): Japan rolled out its first sustainability-related disclosure requirements in 2025. While currently voluntary, these standards are designed for companies listed on the Prime Market of the Tokyo Stock Exchange and cover comprehensive sustainability reporting.
- Financial supervision enhancements in Japan: The country’s Financial Services Agency has implemented amendments to its supervisory guidelines, effective March 2025. These changes streamline reporting requirements for financial institutions, allowing post-implementation reporting for specific business changes, thereby reducing administrative burdens while maintaining oversight.
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Download the outlookCurrent regulatory compliance trends 2025
Modern regulatory compliance is as much about complying with current policies and frameworks as it is about staying abreast of emerging ones. Below is a summary of the latest trends in regulatory compliance for 2025 and beyond.
| Trend | What it is | Implications |
|---|---|---|
| AI regulation and oversight | Regulators are intensifying scrutiny on artificial intelligence, particularly concerning transparency and ethical use. | Organizations must implement robust AI governance frameworks and ensure accurate disclosures to avoid regulatory penalties. |
| Enhanced ESG reporting requirements | ESG disclosures are becoming mandatory in many jurisdictions, and reporting standards are stricter. | Companies need to invest in systems for accurate ESG data collection and align operations with sustainability goals. |
| Stricter cybersecurity regulations | New laws, such as the UK’s Cyber Security and Resilience Bill, are enforcing rigorous cybersecurity measures and incident reporting. | Businesses must bolster cybersecurity infrastructures and comply with enhanced reporting obligations to mitigate risks. Businesses must bolster cybersecurity infrastructures and comply with enhanced reporting obligations to mitigate risks. |
| Data privacy law expansion | Data protection regulations are expanding globally, with increased enforcement and higher penalties for non-compliance. | Organizations should adopt privacy-by-design principles and update data governance policies to adhere to new laws. |
| Regulatory technology (RegTech) adoption | Integrating technologies like AI is streamlining compliance processes and enhancing risk management. | Investing in regulatory compliance solutions can improve compliance efficiency and provide real-time monitoring capabilities. |
| Supply chain transparency demands | Regulators require greater transparency in supply chains, focusing on ethical sourcing and labor practices. | Companies must conduct thorough due diligence and implement monitoring systems to ensure supplier compliance. |
| Greater regulatory alignment | There is a push toward aligning regulatory standards across borders, particularly in areas like AML and KYC. | Businesses operating internationally must adapt to unified compliance frameworks to facilitate cross-border operations. |
What are the common challenges in achieving regulatory compliance?
Maintaining compliance can be challenging for small organizations and large enterprises alike due to distinct but equally complex factors.
Regulatory compliance challenges small-to-medium-sized organizations face
Meeting regulatory compliance standards can be an uphill battle for many small and medium-sized businesses (SMBs). Unlike large corporations with dedicated compliance teams and budgets, SMBs often juggle limited resources and expertise, making it harder to keep up with complex, evolving requirements.
- Limited budgets and staffing: SMBs rarely have the luxury of a whole compliance department. Often, compliance responsibilities fall to HR, operations or legal generalists. This can lead to reactive rather than proactive approaches, increasing the risk of missed updates or errors.
- Constant change: Regulations evolve by design, making tracking legal updates a significant burden for SMBs. From labor laws to data privacy mandates, staying current without a full-time compliance lead can be overwhelming.
- Training and awareness gaps: Employees may not fully understand their compliance responsibilities without structured training programs. In smaller teams with fluid roles, this can lead to accidental breaches, particularly in areas like data handling, financial reporting or HIPAA compliance.
- Vendor and third-party risk: Many SMBs rely on outside vendors to fill operational gaps. However, using third-party services — especially for IT or payroll — comes with a shared compliance risk. SMBs may unknowingly expose themselves to legal or security issues without rigorous vetting or monitoring.
- Disconnected manual processes: Spreadsheets and email chains are still common in many small businesses, leading to fragmented compliance efforts. The lack of centralized systems makes it hard to track documentation, monitor risks or prove compliance during an audit.
- Cybersecurity and data protection: Cybersecurity threats are rising, but SMBs often lack the tools, funding or policies to safeguard sensitive data effectively. As regulators crack down on breaches and data misuse, smaller firms face growing exposure without enterprise-grade security or compliance tools.
- Fear of noncompliance: SMBs often feel stuck between knowing they’re at risk and not knowing where to begin. Without the right-sized tools, achieving and maintaining compliance can seem too complex, leading to inaction or minimal compliance that doesn’t stand up to scrutiny.
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Explore Diligent AI Risk EssentialsRegulatory compliance challenges for enterprise organizations
Larger organizations typically have more compliance resources; however, their size, complexity and global reach introduce a unique set of challenges. Regulatory compliance at the enterprise level requires coordination across functions, jurisdictions and technologies, all while facing heightened scrutiny from regulators and the public.
- Navigating complex, multi-jurisdictional requirements: Enterprises often operate across dozens of regions, each with distinct legal frameworks and regulatory standards. Coordinating compliance with global privacy laws, financial reporting regulations and ESG mandates requires deep legal expertise and highly scalable systems.
- Managing compliance across business units: In large organizations, different departments and subsidiaries may develop their own compliance approaches. This fragmentation can result in inconsistent application of policies, redundant systems or even conflicting interpretations of regulations, especially if oversight is decentralized.
- Data volume and complexity: Enterprises generate and store vast volumes of data, much of which is sensitive or subject to regulation. Ensuring data accuracy and proper classification across global systems is a monumental task, especially in light of regulations like GDPR or HIPAA.
- Supply chain risk: With sprawling vendor ecosystems, large organizations face elevated exposure to third-party compliance failures. From unethical sourcing practices to cybersecurity vulnerabilities in partners’ systems, enterprises are increasingly held accountable for risks that extend beyond their own operations.
- Cybersecurity and incident response: Regulators are tightening requirements around breach reporting and cyber resilience. Enterprises must have robust incident response protocols that not only contain threats but also comply with tight regulatory timeframes across regions.
- Keeping pace with emerging tech and AI regulation: Enterprises are rapidly adopting AI and automation — but regulation around these tools is still evolving. Large companies must stay ahead of emerging legislation and ensure the responsible use of those technologies without slowing innovation.
The costs of non-compliance
Firms that breach regulatory requirements can face significant fines, lawsuits or other financial penalties. In the worst-case scenario, regulators can ban firms from operating in specific markets.
Firms can also face growing fines and lawsuits due to corporate data breaches, for instance. The average cost per cyber breach exceeded $3 million as of 2025.
Businesses can also be subject to remedial action. For instance, in the UK, the FCA can mandate that non-compliant financial promotions be removed from circulation. Depending on the violation, steep SOX penalties are also available in the U.S.
The reputational repercussions of non-compliance with regulatory requirements can also be significant. Regulators tend not to be shy about publicizing transgressions as a warning to other firms about the potential penalties; negative headlines can be an unwelcome side-effect of regulatory breaches.
Learn more about the consequences of non-compliance here.
Key components of a compliance program
Behind effective risk prevention, detection and response is a strong regulatory compliance program. These programs are foundational to a trustworthy and resilient compliance strategy, whether you’re in finance, healthcare, manufacturing or tech.
- Risk assessment: A robust compliance program starts with understanding your risks. This means identifying where the organization is most vulnerable to regulatory breaches — whether in operations, data privacy, supply chain practices or financial reporting. Risk assessments should be ongoing and responsive to shifts in laws, markets and technologies.
- Policies and procedures: Once you’ve identified risks, you must establish clear, actionable compliance policies and procedures. These written standards guide employee behavior and promote consistent, lawful operations. They should be tailored to your industry, regularly reviewed and easily accessible to all staff.
- Training and education: Even the best policies fall flat if no one knows them. Effective compliance programs educate employees at all levels about their responsibilities. Regular training, especially during onboarding and anytime regulations change, builds a culture of compliance and equips staff to recognize and avoid violations.
- Monitoring and auditing: Compliance constantly evolves. Regular audits and monitoring activities help organizations measure policy adherence and spot gaps early. This could involve internal audits, third-party reviews or real-time system monitoring, depending on the risk profile.
- Reporting and incident response: Even with preventative measures, issues can arise. Strong programs make reporting concerns easy — and safe — for employees. A clear incident response protocol ensures that violations are investigated promptly and resolved appropriately, minimizing harm and legal exposure.
Regulatory compliance plan
A regulatory compliance plan is a documented, actionable roadmap that outlines how a business will identify, manage and monitor its legal obligations. It includes defined roles and responsibilities, internal policies, training protocols and systems for detecting and responding to potential violations.
While these elements must be tailored, most strong regulatory compliance plans will include:
- Regulatory risk assessment: Identify the laws and regulations applicable to your business, assess exposure and prioritize risks.
- Policies and procedures: Establish clear internal policies that reflect external requirements and employee responsibilities.
- Internal monitoring: Use audits, data tracking and control mechanisms to ensure day-to-day compliance.
- Reporting and escalation: Implement confidential reporting channels and clear procedures for handling violations.
- Continuous improvement: Regularly review and update the plan to keep pace with evolving regulations and business operations.
How to ensure compliance with regulatory requirements
Ensuring regulatory compliance starts by identifying the regulations you must follow. It then typically involves the following steps:
- Auditing: Assess and review your current approach to regulated processes to identify any shortcomings and make a plan to remedy them.
- Assigning roles and responsibilities: Who is responsible for regulatory compliance? Do you have a dedicated compliance team or compliance officer? Establishing who’s responsible for regulatory compliance will help drive execution.
- Developing policies: Set clear compliance policies and review them frequently to ensure they keep pace with a changing regulatory universe. You should aim for continuous improvement in ethos when it comes to regulatory compliance.
- Documenting: Ensure that you capture and audit your approach, for example, when following anti-money laundering requirements.
- Training: Are employees clear on the role they have in regulatory compliance? Establishing a culture of compliance demands that everyone plays their part.
- Testing: Monitor your internal controls to ensure that you meet regulatory requirements, such as checking that food is produced or stored at the correct temperature.
- Measuring: Part of proving regulatory compliance is measuring your efforts. This might mean measuring your impact, like how much greenhouse gases you emit, or it might mean quantifying your efforts, like the number of breaches you’ve prevented.
- Reporting: Collect and centralize evidence that you have met certain requirements, for example, reporting around your climate-related obligations.
Regulatory compliance reporting
Regulatory compliance reporting is the process of documenting and submitting required information to government agencies, industry regulators or internal stakeholders to demonstrate adherence to laws, regulations and standards.
Effective reporting is a key pillar of risk management and transparency. However, reporting can look different depending on your industry and jurisdiction.
Types of regulatory compliance reporting
| Industry | Common reporting requirements |
|---|---|
| Finance | SEC filings (10-K, 10-Q), suspicious activity reports (SARs), capital adequacy disclosures |
| Healthcare | HIPAA breaches, Medicare/Medicaid billing compliance, patient privacy documentation |
| Technology | Data privacy disclosures under GDPR and CCPA, breach notifications, AI use transparency reports |
| Environmental | Emissions reports, waste management logs, climate risk disclosures under frameworks with TCFD |
| Insurance | Solvency reports, claims compliance audits, anti-fraud documentation |
Key elements of an effective reporting process
- Clear reporting calendar: Stay ahead of filing deadlines with a centralized compliance calendar. Some tools can even send compliance alerts about upcoming reports or regulatory changes.
- Role clarity and accountability: Assign clear ownership for each report type across legal, finance, operations or HR.
- Data integrity: Use integrated systems to collect, validate and track compliance data in real-time. This will streamline reports because you’ll already have the data at your fingertips.
- Audit readiness: Maintain records and supporting documentation in a format that meets audit standards. Audit trails can also make your processes clearer and more defensible.
- Automation and tools: Leverage regulatory compliance software to reduce manual work, automate critical tasks and improve your accuracy.
How to stay updated with regulatory changes?
Staying current is essential for reducing your compliance risk, but it isn’t easy. Laws and regulations change frequently — sometimes with little warning — and failure to adapt can lead to penalties, reputational damage or operational disruptions.
Here are a few key strategies:
- Subscribe to regulatory alerts and newsletters: Many regulatory bodies, including the SEC, FDA, EPA, and the FCA, offer newsletters and email alerts that notify subscribers of upcoming changes, comment periods and final rulings. Industry associations and legal firms provide curated compliance updates tailored to specific sectors.
- Monitor government and agency websites: Regularly check the websites of relevant federal, state or international regulatory agencies. These sites often publish updates, enforcement actions and guidance documents that signal how new rules will be interpreted.
- Train your team regularly: Invest in continuous education for compliance teams and frontline employees. Your staff should know the current requirements and be aware of what’s coming next and how it could affect their work.
- Establish an internal regulatory watch team: Designate a cross-functional team responsible for tracking, analyzing and communicating regulatory updates across departments. This proactive approach creates shared accountability and ensures that no critical changes slip through the cracks.
- Use compliance software: Compliance and risk management platforms can automate monitoring across jurisdictions, flag relevant updates, and assess potential impacts — saving time and reducing human error.
Technology and AI for regulatory compliance
As regulatory demands grow more complex, organizations are adopting technology and AI to streamline their compliance efforts. From intelligent software platforms to AI-powered analytics, digital tools help compliance teams stay ahead of shifting regulations, reduce manual burden and respond to real-time risks.
- Compliance management systems: Tools like Diligent Regulatory Compliance Management organize and track all compliance-related activities. These systems streamline workflows such as policy management, employee training, risk assessments and audit readiness — increasing transparency and reducing the chances that critical data will slip through the cracks.
- AI-powered compliance monitoring: AI enables compliance teams to go beyond spreadsheets and checklist approaches. AI tools can monitor internal communications for signs of misconduct, analyze patterns in large datasets to detect emerging risks and even scan global regulatory updates to flag relevant changes. These tools reduce the time it takes to detect potential issues and make it easier to address them proactively.
- Document automation: Manually generating compliance documents — whether policies, contracts or disclosures — can be time-consuming and error-prone. Document automation software allows teams to produce accurate, up-to-date materials from pre-approved templates, reducing human error and promoting consistency across departments and geographies.
- Real-time risk alerts: AI-powered compliance platforms can send alerts when thresholds are breached or unexpected behavior is detected. Whether it’s a cybersecurity incident, a late filing or a policy violation, real-time alerts help compliance teams respond quickly and contain potential damage.
- Audit trails and evidence tracking: Maintaining a clear and complete record of compliance actions is essential for audit readiness. Software tools now provide automatic audit trails, logging all relevant activities and creating a defensible record of due diligence. This is particularly useful during investigations, regulatory reviews or internal assessments.
- Compare regulations: AI can easily compare two versions of the same regulations, clarify differences and organize changes by key categories. This makes it easy to zero in on which updates to make to your policies and procedures as the regulatory landscape evolves.
- Predictive analytics: By analyzing historical data and current trends, tools like Diligent AI can forecast areas of future noncompliance, identify departments or regions at higher risk and prioritize preventive actions. This forward-looking capability enables organizations to shift from a reactive to a proactive compliance strategy.
- Natural language processing (NLP) tools: These tools enhance compliance by making sense of vast amounts of unstructured text, including legal documents, regulatory guidance, contracts and internal communications. This helps compliance teams parse, interpret and act on critical information with greater speed and confidence.
Stay on the cutting edge of regulatory compliance — starting with AI
AI has already become essential to keeping pace with the rapidly evolving regulatory landscape. From automated monitoring to predictive analytics, compliance teams are better equipped than ever to manage risk and stay audit-ready. But as AI transforms how we approach compliance, it’s also drawing scrutiny from global regulators.
Staying truly future-proof requires that you not only use AI to meet your compliance obligations but also prepare for regulatory compliance related to AI itself. Want to understand the latest in AI regulations worldwide and what they mean for your business? Read about the latest in AI regulations and how to start preparing your board.
FAQs
What is the difference between legal compliance and regulatory compliance?
Legal compliance refers to following the laws passed by a governing body, such as federal, state or local laws. Regulatory compliance, on the other hand, means adhering to specific rules or standards set by regulatory agencies (e.g., the SEC, FDA or EPA). While legal compliance is broader, regulatory compliance focuses on industry-specific obligations. Both are essential to avoiding penalties, litigation and reputational risk.
Who is responsible for regulatory compliance in a company?
Regulatory compliance is a shared responsibility, but it’s typically overseen by a Chief Compliance Officer (CCO), legal counsel or a compliance team. In smaller organizations, this may fall to an operations or finance lead. Ultimately, executive leadership is accountable, and all employees have a role to play through training and policy adherence.
How do small businesses manage compliance without a legal team?
Small businesses can manage compliance by leveraging cost-effective tools and external support. This often includes:
- Using the right-sized compliance management software to track tasks and deadlines
- Outsourcing to legal consultants or fractional compliance officers
- Accessing free resources from industry associations and regulatory bodies
- Staying proactive with regular policy reviews and employee training
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What are examples of common compliance violations?
Some of the most frequent compliance violations across industries include:
- Failure to protect personal data (e.g., HIPAA or GDPR breaches)
- Misclassification of employees (W-2 vs. 1099)
- Incomplete financial reporting or missed filing deadlines
- Workplace safety violations (OSHA noncompliance)
- Inadequate documentation or audit trails
- False advertising or marketing claims
Avoiding these issues starts with clear policies, ongoing training, and systemized compliance tracking.
Can AI help with regulatory compliance?
Yes, AI is increasingly valuable for compliance. It helps organizations:
- Monitor data and communications for red flags
- Analyze large volumes of regulations quickly
- Automate repetitive tasks like documentation and reporting
- Predict emerging risks based on behavior and past violations
- Keep audit trails and alert teams in real-time
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How often do regulations change?
Regulations can change frequently and unpredictably, sometimes monthly, especially in sectors like healthcare, finance, data privacy and environmental impact. Change is even faster in global markets and emerging technologies (e.g., AI or crypto). That’s why having a compliance monitoring system — or a trusted resource — is crucial.
What resources can help me stay on top of new regulations?
To stay current with evolving regulations, try a combination of:
- Regulatory intelligence platforms
- Agency email alerts (e.g., SEC, OSHA, FDA)
- Industry newsletters and bulletins
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