Compliance risk is a significant challenge that financial institutions face today. Failure to comply with regulatory requirements, industry standards, or internal policies can result in legal or financial penalties, reputational damage, loss of customer trust, and even business closure. Communication with customers is an essential part of compliance, and any failure to communicate effectively and transparently can lead to significant compliance risks. In this blog, we will discuss 101 compliance risk examples that financial institutions might face, with particular attention to communication with customers.

1. Failure to disclose fees and charges on financial products or services
2. Misleading advertising that misrepresents the terms and conditions of products or services
3. Failure to obtain proper consent from customers before conducting certain transactions
4. Failure to maintain proper records of transactions and customer data
5. Failure to comply with anti-money laundering (AML) regulations
6. Failure to comply with know-your-customer (KYC) requirements
7. Failure to comply with customer identification program (CIP) requirements
8. Failure to verify the identity of customers before opening accounts
9. Failure to monitor and report suspicious activities or transactions
10. Failure to conduct proper due diligence on high-risk customers or transactions
11. Failure to comply with data protection laws and regulations
12. Failure to notify customers of changes to terms and conditions of products or services
13. Failure to provide clear and accurate information about the risks associated with financial products or services
14. Failure to provide adequate disclosures about conflicts of interest
15. Failure to comply with regulations governing the use of customer data for marketing purposes
16. Failure to provide customers with timely and accurate information about their accounts
17. Failure to provide customers with adequate notice before closing accounts
18. Failure to provide customers with accurate and timely statements
19. Failure to comply with regulations governing the use of electronic signatures
20. Failure to comply with regulations governing the use of electronic records
21. Failure to comply with regulations governing the use of electronic communication
22. Failure to provide customers with adequate notice before changing interest rates or fees
23. Failure to comply with regulations governing the use of customer funds
24. Failure to provide customers with accurate and transparent information about the risks of investing in complex financial products, such as derivatives or structured products
25. Failure to disclose conflicts of interest in investment advice or portfolio management
26. Failure to comply with regulations governing the sale of insurance products
27. Failure to provide customers with accurate and transparent information about insurance products, including coverage and premiums
28. Failure to maintain proper records of insurance policies and claims
29. Failure to comply with regulations governing the sale of securities
30. Failure to provide customers with accurate and transparent information about securities products, including risks and costs
31. Failure to disclose conflicts of interest in securities transactions or recommendations
32. Failure to comply with regulations governing the use of margin accounts and leverage in securities trading
33. Failure to maintain proper records of securities transactions and customer data
34. Failure to comply with regulations governing the sale of mutual funds
35. Failure to provide customers with accurate and transparent information about mutual funds, including fees and risks
36. Failure to disclose conflicts of interest in mutual fund recommendations or transactions
37. Failure to comply with regulations governing the sale of annuities
38. Failure to provide customers with accurate and transparent information about annuities, including fees and risks
39. Failure to disclose conflicts of interest in annuity recommendations or transactions
40. Failure to maintain proper records of annuity policies and claims
41. Failure to comply with regulations governing the sale of real estate investment trusts (REITs)
42. Failure to provide customers with accurate and transparent information about REITs, including risks and fees
43. Failure to disclose conflicts of interest in REIT transactions or recommendations
44. Failure to maintain proper records of REIT transactions and customer data
45. Failure to comply with regulations governing the sale of alternative investments, such as hedge funds or private equity
46. Failure to provide customers with accurate and transparent information about alternative investments, including risks and fees
47. Failure to disclose conflicts of interest in alternative investment recommendations or transactions
48. Failure to maintain proper records of alternative investment transactions and customer data
49. Failure to comply with regulations governing the sale of commodities or futures
50. Failure to provide customers with accurate and transparent information about commodities or futures trading, including risks and costs
51. Failure to disclose conflicts of interest in commodities or futures recommendations or transactions
52. Failure to maintain proper records of commodities or futures transactions and customer data
53. Failure to comply with regulations governing the sale of cryptocurrencies or digital assets
54. Failure to provide customers with accurate and transparent information about cryptocurrencies or digital assets, including risks and costs
55. Failure to disclose conflicts of interest in cryptocurrencies or digital assets recommendations or transactions
56. Failure to maintain proper records of cryptocurrencies or digital assets transactions and customer data
57. Failure to comply with regulations governing the sale of foreign exchange (Forex) products
58. Failure to provide customers with accurate and transparent information about Forex trading, including risks and costs
59. Failure to disclose conflicts of interest in Forex recommendations or transactions
60. Failure to maintain proper records of Forex transactions and customer data
61. Failure to comply with regulations governing the sale of credit products, such as loans or credit cards
62. Failure to provide customers with accurate and transparent information about credit products, including interest rates and fees
63. Failure to disclose conflicts of interest in credit product recommendations or transactions
64. Failure to maintain proper records of credit product transactions and customer data
65. Failure to comply with regulations governing the sale of mortgages or home equity loans
66. Failure to provide customers with accurate and transparent information about mortgage or home equity loan products, including interest rates and fees
67. Failure to disclose conflicts of interest in mortgage or home equity loan recommendations or transactions
68. Failure to maintain proper records of mortgage or home equity loan transactions and customer data
69. Failure to comply with regulations governing the sale of student loans or personal loans
70. Failure to provide customers with accurate and transparent information about student or personal loan products, including interest rates and fees
71. Failure to disclose conflicts of interest in student or personal loan recommendations or transactions
72. Failure to maintain proper records of student or personal loan transactions and customer data
73. Failure to comply with regulations governing the sale of prepaid cards or other payment products
74. Failure to provide customers with accurate and transparent information about prepaid cards or payment products, including fees and restrictions
75. Failure to disclose conflicts of interest in prepaid card or payment product recommendations or transactions
76. Failure to maintain proper records of prepaid card or payment product transactions and customer data
77. Failure to comply with regulations governing the sale of remittance services or money transfers
78. Failure to provide customers with accurate and transparent information about remittance services or money transfer products, including fees and exchange rates
79. Failure to disclose conflicts of interest in remittance or money transfer recommendations or transactions
80. Failure to maintain proper records of remittance or money transfer transactions and customer data
81. Failure to comply with regulations governing the sale of payment processing services
82. Failure to provide customers with accurate and transparent information about payment processing services, including fees and restrictions
83. Failure to disclose conflicts of interest in payment processing recommendations or transactions
84. Failure to maintain proper records of payment processing transactions and customer data
85. Failure to comply with regulations governing the sale of financial planning or advisory services
86. Failure to provide customers with accurate and transparent information about financial planning or advisory services, including fees and risks
87. Failure to disclose conflicts of interest in financial planning or advisory recommendations or transactions
88. Failure to maintain proper records of financial planning or advisory transactions and customer data
89. Failure to comply with regulations governing the sale of insurance products, such as life, health, or property insurance
90. Failure to provide customers with accurate and transparent information about insurance products, including coverage and premiums
91. Failure to disclose conflicts of interest in insurance product recommendations or transactions
92. Failure to maintain proper records of insurance product transactions and customer data
93. Failure to comply with regulations governing the sale of annuities or other retirement products
94. Failure to provide customers with accurate and transparent information about annuity or retirement products, including fees and risks
95. Failure to disclose conflicts of interest in annuity or retirement product recommendations or transactions
96. Failure to maintain proper records of annuity or retirement product transactions and customer data
97. Failure to comply with regulations governing the sale of trust or estate planning services
98. Failure to provide customers with accurate and transparent information about trust or estate planning services, including fees and risks
99. Failure to disclose conflicts of interest in trust or estate planning recommendations or transactions
100. Failure to maintain proper records of trust or estate planning transactions and customer data
101. Failure to comply with regulations governing the sale of any financial product or service, including failure to register or obtain proper licenses or certifications.

So Many Risks. How Can Corporates Protect Themselves?

With financial institutions facing a myriad of compliance risks related to their communication with customers, how can they protect themselves, their reputation and their clients? These risks can arise from failures to provide accurate and transparent information, disclose conflicts of interest, or maintain proper records of transactions and customer data. To mitigate these risks, financial institutions must adhere to strict regulations governing the sale of financial products and services and invest in robust compliance programs that include regular training and auditing. By doing so, they can help protect themselves and their customers from the negative consequences of non-compliance.