Armenia’s Businesses Embracing Compliance as Market Develops and Foreign Partners Enter Scene
The Growing Importance of Compliance in Armenia
As the Armenian market continues to develop, foreign companies are increasingly entering the scene. This has led to a growing emphasis on compliance, with many businesses recognizing its importance in protecting themselves from financial and reputational losses.
What is Compliance?
Compliance refers to a set of measures aimed at preventing actions by a company or its employees that contradict legislation, industry-accepted standards, and internal ethical norms. It encompasses everything a company does to ensure responsible behavior by its employees and the business as a whole in the market.
Why Businesses Need Compliance
Compliance has an accumulative effect and allows businesses to protect themselves from potential risks. Legislation changes rapidly, new regulations and requirements emerge in various commercial sectors, and existing requirements may become more stringent. If a company is not prepared for this, it may face significant fines and legal proceedings due to accusations of tax or economic crimes.
Types of Compliance
There are several types of compliance, including:
- Anti-corruption compliance: primarily oriented towards natural monopolies, but relevant for any commercial companies as well.
- Tax compliance: a risk management system, checking business processes for compliance with current tax legislation and voluntary commitments.
- Financial compliance: the regulation and ensuring compliance with laws/rules in the financial sector.
Main Risks that Compliance Helps Prevent
In general, compliance helps businesses avoid a significant number of risks, reduce financial losses, preserve reputation and assets. Non-compliance with regulatory norms and standards, reputational risks, and financial risks are some of the main risks that compliance helps prevent.
Implementing Compliance in an Organization
The general sequence of actions to implement compliance is as follows:
- Assess the risks existing for the business: Identify areas where compliance is necessary.
- Make a decision on what areas need compliance: Based on the assessment, determine which areas require compliance measures.
- Analyze the work of competitors: Research how other companies in the industry approach compliance.
- Engage experts, such as lawyers to develop necessary policies: Hire professionals to create and implement compliance policies.
- Inform employees about all important rules: Educate staff on the importance of compliance and company policies.
- Appoint responsible individuals to monitor policy implementation: Designate team members to oversee compliance efforts.
- Work on eliminating identified violations: Take corrective action to address any non-compliance issues.
By following this sequence, businesses can effectively implement compliance measures and mitigate risks.