More than a third of firms in emerging financial sectors are still not sufficiently prepared for compliance audits, according to the latest research from SmartSearch.
SmartSearch’s survey found that these firms freely admitted that they would need more than a week to compile a compliance audit, if they found themselves under investigation.
The property development sector was slightly better prepared compared to others, with more than a quarter admitting to needing more than a week to assemble a compliance audit if investigated.
In contrast, the crypto platforms, banking, and gambling sectors showed a higher level of vulnerability.
More than a third of the firms in these sectors acknowledged that they would require more than a week to prepare a compliance audit.
Martin Cheek (pictured), managing director at SmartSearch, said: “The financial sectors are under constant siege, and breaching the rules unintentionally is not an adequate defence.
“The inability to swiftly compile a compliance audit when the regulator knocks on the door not only poses a risk of business downtime, but also opens up firms to potential legal ramifications.”
The Financial Conduct Authority (FCA) began the year with afocus on anti-money laundering (AML), handing out fines for compliance failures.
The common thread in the FCA’s actions has been punishing firms for their shortcomings on AML compliance, even in cases where there is no explicit proof of money laundering taking place.
Principle 3 of the FCA’s Principles for Business requires a firm to “take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.”
Cheek added: “Being audit-ready is not just about adhering to regulations. It’s about safeguarding a firm’s reputation and ensuring the continuity of business operations without disruptions.
“Firms must stop wasting time and resources on inadequate reporting; by adopting a fully automated and easy-to-understand compliance platform, you get the reports you want or need immediately.”
