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Media

What is Compliance?

Matthew Warner | December 2020

To comply with something means to act in such a manner as it requires. This is an everyday part of life; lawful citizens of a country comply with its laws, businesses will comply with the terms of contracts, employees comply with health and safety measures, or a lawyer would comply with the wishes of their client. In the context of the work Blockpass is involved with - the legal requirements of the regulatory landscape - compliance is the adherence to various guidelines, processes and procedures (as laid down in the relevant regulations) that have been drawn up to ensure as safe and secure an environment as possible for those seeking to conduct business legitimately.

If compliance with regulations was not enforced, markets, businesses and individuals would be open to a whole range of scams, accidental involvement in illicit activities, and exposure to bad actors seeking to take advantage of them. This was the situation some found themselves in when the cryptocurrency and ICO booms started as the new technology meant there was an initial lack of regulatory oversight and the absence of rules to comply with encouraged criminals to try and take advantage of honest users. Fortunately, due to the unique properties of blockchain technology, this has ultimately backfired on many criminals and there are instances where those affected have been able to reclaim their money, although the impact of this lack of compliance has caused a lot of harm to the cryptocurrency and blockchain cause both through the effects it has had on peoples’ business and the linked poor reputation it has engendered. 

 

In order to enforce compliance, there are often heavy penalties for those that do not meet regulatory standards and guidelines. This has been evidenced in recent years in particular with companies that have data protection issues and leak personal information. Examples of this can be seen in the fines levied under GDPR against Google (EURO 50 million), H&M (over EURO 35 million) and Italian mobile provider TIM (over EURO 27 million), yet these numbers pale in comparison to some other fines that have been issued in previous years, such as the US$1.1 billion fine levied against Standard Chartered, which was a result of poor AML practices and sanctions list breaches.  

 

With these sanctions in mind, it is important for companies to be aware of regulations they need to comply with. As different regulations can be set by countries, it is vital for a company (or individual) to also know the regulatory requirements for the different jurisdictions that they are operating in. In addition, regulations change and evolve over time, meaning that it is necessary to stay on top of the latest developments. Due to this, many companies will employ a compliance officer, team or department to ensure that the necessary measures are being followed to keep up to date with regulatory standards. 

 

Although these measures are put in place to create a safe environment for people to operate in, the time and effort required to achieve compliance can be prohibitive for smaller businesses, or at least represent a large drain on resources for others. Various reports and studies have found that compliance takes a significant amount of time and cost for businesses as technology opens up new methods for criminals to attack which have to be mitigated and global markets become more ubiquitous. Without an effective solution, the expense is likely to become prohibitively large and prevent the growth of industries, or else risk regulations being forced to be relaxed in order to allow businesses to function – thereby inviting risk to those involved.   

 

Fortunately, whilst developing technology has given rise to some of the issues and need for compliance that companies are now facing, it also holds the solution. Blockpass has created a self-sovereign identity verification solution that is designed to enable simple, secure and cost-effective compliance that incorporates documents and facilitates compliance with regulations around the world.

The Blockpass platform is fully automated and hosted in the cloud, with no integration or setup fee. Businesses can sign up to the KYC Connect console in a matter of minutes, test out the service, and start conducting identity documents verification, KYC and AML checks. Sign up for FREE at console.blockpass.org.