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ComplySci stats: 39% of compliance professionals serving financial firms with government contracted work state the most significant challenge is the creation of and employee education on the firm’s pay-to-play compliance policy.

Did you know that 57% of compliance professionals serving financial firms with government contracted work state they are monitoring the political contributions of at least 50 covered associates?

In our recent webinar, “Addressing political contribution risk during a midterm election year” we sat down with political contribution compliance experts to discuss the regulatory risk that comes with heightened political activism. One of the key takeaways? How critical it is for firms to not only create and incorporate a robust pay-to-play compliance policy, but also educate their employees on said policy.

Why employee education is a critical component of your pay-to-play compliance policy and procedures

When asked to identify the most challenging aspect of their political contribution compliance efforts were, the audience response indicated that the creation of policies and employee education was the most challenging. In total, responses broke down as follows:

  • The number of regulations – 10%
  • Monitoring covered associates political giving – 23%
  • Creating and educating employees on political contribution/pay-to-play policy – 39%
  • The variety of direct and indirect risks – 23%
  • Other – 4%

Despite the challenge it represents, employees must receive proper edification on your firm’s pay-to-play policy to protect against the multitude of risk factors your firm faces…especially during a midterm election year. In fact, such education can help:

  1. Ensure covered associates understand the relevant regulations both a federal and local level.
  2. Facilitate a more active culture of compliance with associates who recognize the specific risk factors that may be at play and are aware of your specific policies on political contributions.
  3. Show to federal and local regulators that your firm takes its policies seriously and works to ensure all employees proactively mitigate risk where possible.

While technology can help you aggregate the appropriate information and detect violations after they occur, your employees are your front line of defense against political contribution regulation breaches. After all, if they are equipped with the right education and knowledge on your policies, they can better assess when and if it is appropriate to donate to specific political parties and elections.

While midterm elections may highlight the risk, political contribution compliance should be a priority for firms all year, every year. Download the ultimate guide to pay-to-play compliance for more insight into maneuvering the ever-increasing complexities of political contribution compliance