Navigating Financial Compliance: Essential Tips for Businesses

Corrie Scoby
Nov 5
6 min read

By Corrie Scoby • Chief Consultant & Owner, Three Lumos Consulting, LLC

In today’s fast‑paced and highly regulated business environment, financial compliance has become more than a legal requirement — it’s a foundation for trust and long‑term success. As regulations evolve, key themes such as cybersecurity, data privacy, and anti‑money laundering (AML) have taken center stage. Registered Investment Advisers (RIAs) that proactively manage compliance not only avoid penalties but also enhance their credibility with clients and regulators alike.

Quick navigation:

Understanding Financial Compliance

Establishing a Compliance Culture

Keeping Up with Evolving Regulations

Building an Effective Compliance Program

Leveraging Technology for Compliance

Engaging Stakeholders and Maintaining Transparency

Learning from Non‑Compliance Cases

The Role of Leadership in Compliance

Conclusion: Embrace Compliance as a Strategic Advantage

Understanding Financial Compliance

Financial compliance refers to adhering to rules, standards, and regulations that govern financial operations. This includes recordkeeping, performance reporting, anti‑money laundering (AML) and data protection. Each of these plays a critical role in maintaining integrity and transparency within a business.

Recordkeeping: SEC‑registered investment advisers must maintain comprehensive books and records. Under 17 CFR § 275.204‑2, advisers are required to keep journals of cash receipts and disbursements, general and auxiliary ledgers, memoranda of orders, checkbooks, bank statements and communications relating to client orders[5]. Maintaining accurate and current records ensures transparency and makes regulatory examinations easier.

Keep journals, ledgers, order memoranda, checkbooks, bank statements and client communications to demonstrate transparency and ease regulatory exams [5].

Performance reporting: Prepare accurate and timely performance reports for clients in line with accepted industry standards. Transparent reporting builds client confidence and demonstrates accountability.
Anti‑Money Laundering (AML): In September 2025 FinCEN proposed to postpone the effective date of its final Investment Adviser AML rule from 1 January 2026 to 1 January 2028[2]. Until the new rule is finalized, RIAs should continue to follow existing AML obligations — such as implementing customer due‑diligence procedures, monitoring for suspicious activity and filing reports — under current FinCEN guidance. Staying proactive helps firms avoid penalties and reputational harm.

Although the Investment Adviser AML rule’s effective date has been pushed to January 1, 2028, advisers must still follow existing AML programs by performing customer due diligence, monitoring transactions and reporting suspicious activity [2].

Data Protection: Beyond the EU’s GDPR and California’s CCPA, an expanding number of U.S. states have enacted comprehensive privacy laws. As of April 2025, states with their own data‑privacy statutes include California (CCPA/CPRA), Virginia (VCDPA), Colorado (CPA), Connecticut (CTDPA), Utah (UCPA), Iowa, Indiana, Tennessee, Montana, Texas, Oregon, Delaware, New Jersey, New Hampshire, Nebraska and Kentucky[6]. These laws grant consumers rights to access, delete and correct their data and impose disclosure, security and opt‑out requirements on businesses. RIAs should inventory the personal data they collect, update privacy policies and adjust workflows to comply with each applicable jurisdiction.

Sixteen U.S. states—including CA, VA, CO, CT, UT, IA, IN, TN, MT, TX, OR, DE, NJ, NH, NE and KY—have their own comprehensive privacy laws. Map your data flows and update workflows to comply with each jurisdiction[6].

Establishing a Compliance Culture

Compliance isn’t confined to a department — it’s a company‑wide mindset. A strong compliance culture ensures that every employee understands and values the importance of ethical behavior and adherence to rules. Effective steps include ongoing training, clear internal policies and an open‑door reporting structure. Leaders should model compliant behavior and reinforce accountability through consistent communication and positive recognition.

Keeping Up with Evolving Regulations

Regulations evolve rapidly, especially in finance, data protection and cyber‑security. In 2025 the SEC and FinCEN emphasized proactive oversight and real‑time monitoring as essential elements of effective compliance. To stay current, subscribe to regulatory alerts and newsletters. FinCEN offers a free FinCEN Updates service that sends e‑mail notifications whenever new guidance, press releases or advisories are posted[7]. Signing up helps firms identify changes early and adapt policies before enforcement begins.

Building an Effective Compliance Program

An effective compliance program integrates risk assessment, policies, monitoring and reporting into daily operations. It should be reviewed annually or whenever firm practices change or regulatory updates occur. For smaller firms, key components include:

Risk identification: Assess business activities for potential conflicts of interest, trading risks and privacy vulnerabilities.
Standardized procedures: Document processes for onboarding clients, executing trades, and handling complaints to ensure consistency.
Internal compliance reviews: Perform periodic supervisory reviews and testing to verify that policies are followed and records are complete.
Designated compliance officer or consultant: Assign responsibility to a qualified professional who oversees the program, coordinates training and addresses regulator inquiries.
Training and communication: Provide staff with regular training and maintain channels for questions and reporting issues.

These elements scale to the size of the firm while fostering accountability and readiness for audits.

Leveraging Technology for Compliance

Technology offers powerful tools for improving compliance efficiency. Automation, AI‑driven analytics and secure data management systems can streamline workflows and flag potential issues early. For example, compliance management software can automate recordkeeping, generate audit trails and ensure consistent reporting. Data analytics can reveal emerging risks, while digital documentation simplifies audits and demonstrates transparency.

Engaging Stakeholders and Maintaining Transparency

Transparent communication with stakeholders — including employees, clients, investors and regulators — is vital. Share compliance updates, publish annual compliance statements and provide educational resources to reinforce trust. Open dialogue encourages feedback and helps identify weaknesses before they become problems.

Learning from Non-Compliance Cases

Examining real‑world cases highlights the consequences of ignoring compliance.

Wells Fargo unauthorized accounts scandal: The Consumer Financial Protection Bureau fined Wells Fargo $100 million for secretly opening more than two million unauthorized deposit and credit card accounts to meet sales targets[3]. The bank also faced penalties from the Office of the Comptroller of the Currency and the City of Los Angeles. This case underscores the importance of an ethical sales culture and robust internal controls.

Wells Fargo’s unauthorized accounts scandal cost $100 million in fines—illustrating the need for ethical sales cultures and robust internal controls[3].

TD Bank AML failures: In 2024, regulators fined TD Bank nearly $3.1 billion for allowing three separate money‑laundering schemes that funneled more than $670 million through the bank’s network[4]. Investigators noted that chronic underfunding of the bank’s AML program led to missed red flags, huge backlogs in transaction monitoring and a culture that de‑emphasized reporting[4]. RIAs can learn from this case by dedicating adequate resources to their AML programs and fostering a culture that prioritizes reporting.

TD Bank paid nearly $3.1 billion after chronic underfunding of its AML program allowed millions to be laundered—proving that investing in compliance and fostering a reporting culture is non‑negotiable [4].

The Role of Leadership in Compliance

Strong leadership is the cornerstone of an ethical organization. Executives must allocate appropriate resources to compliance, set measurable goals and foster accountability across all levels. When leaders view compliance as a strategic advantage rather than a burden, the entire organization benefits. Conversely, when leaders view compliance as an “anti‑profit center,” ethical standards tend to erode across the firm.

Conclusion: Embrace Compliance as a Strategic Advantage

Navigating financial compliance requires diligence, transparency and adaptability. By embracing compliance as an ongoing process — not a one‑time task — businesses can mitigate risk, build credibility and position themselves for sustainable growth. As noted in our previous article How RIAs Can Find the Right Compliance Consultant: Support, Structure & Service (Oct 20 2025), examiners can spot last‑minute clean‑up; building habits that keep your firm proactive — not reactive — is critical. Don’t wait for an audit letter to implement a compliance system; integrate compliance into your daily operations and cultivate a culture of integrity.