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One of the worst things that can happen to the company is becoming the victim of a scam that steals their — and their investors’ — hard-earned money. In many cases, the consequences of losing money to a scam at this scale can be devastating, up to the loss of the business. However, with proper compliance procedures (preferably spearheaded by a partner such as Industry FinTech) businesses can keep themselves and their investors safe.
Unfortunately, in this day and age, fraud is becoming more complex and sophisticated. “Bad actors are able to more accurately imitate a legitimate source, making it more difficult for people to distinguish between scam and reality and causing thousands of people and businesses to have their money stolen,” explains Sandy Fliderman, Founder and President of tech-enabled fund administrator Industry FinTech. “However, as the technology for fraudsters has improved, so too has the technology for security and compliance, allowing businesses to be better prepared to fight back against wrongdoers.”
How to prevent fraud from destroying your company
Some have suggested that further regulation is the solution to this problem, but this is not what is necessary to prevent the impact of fraud and scams. Preventing fraud is the result of following existing regulations and compliance standards. These measures were put in place to protect consumers and businesses alike, and businesses that actively ignore compliance are putting their customers at risk.
Indeed, the culpability for fraud lies just as much with the company as it does with the perpetrator. Companies that leave their and their customers’ data at risk by failing to adhere to any applicable regulations and compliance standards must be held accountable for the consequences of their negligence. Businesses have a plethora of tools at their disposal to prevent their customers’ information from being susceptible to attack, so there is no excuse not to provide the necessary protection.
The goal of compliance and security standards is to prevent fraudulent activity before it ever occurs. Whatever the method, the goal of bad actors is to steal money. Oftentimes, once a fraudster or scammer steals money, it’s often too late to do anything about it. Pursuing legal retribution against people who steal money can often be a costly battle, and the best way to save everyone these costs and frustrations is to stop them before they ever occur.
Ultimately, the biggest vulnerability for a company’s security is its employees. Many scammers and fraudsters target employees hoping to appeal to their impulsiveness and tendency for human error. Since scams have become so sophisticated, even the most sophisticated financial controllers can find themselves bamboozled. As such, it is crucial that businesses invest in a security and compliance program that redistributes the responsibility away from employees.
Ensuring compliance with a third-party administrator
One such way for businesses to free their employees of this burden is to enlist a third-party administrator, such as Industry FinTech, for their security and compliance needs. The role of a third-party administrator is to act as a trusted intermediary between a firm and its investors. These entities can complete essential tasks such as maintaining books, records, and investor documents, ensuring compliance and corporate governing, and providing reporting.
In addition to significantly reducing the burden on individual employees, third-party administrators can reduce the strain on the business as a whole. Business leaders are understandably extraordinarily busy. While corporate compliance is an essential aspect of running a business, it can be easy to get distracted from or overwhelmed by jumping through so many hoops.
“A third-party administrator is staffed with professionals who are experts in corporate compliance, not entrepreneurs for whom compliance is a secondary concern,” Fliderman explains. “As a result, third-party administrators are much less prone to making mistakes than a business leader who does not have the time to dedicate to these initiatives. Furthermore, by letting a third-party administrator handle the business’s compliance needs, leaders can focus on the operational issues that need their attention.”
How the IFT Seal represents the peak of compliance standards
When a company works with Industry FinTech as their third-party administrator, they receive the “IFT Seal” as a visual representation of their partnership with IFT. “Our solution is built around compliance,” asserts Fliderman. “It is part of every process and activity we provide. If you see a company boasting the IFT Seal, you can rest easy knowing that their compliance standards are high.”
A company receiving a designation such as the IFT Seal is not a compliance step in and of itself, but a representation that they have taken the required compliance steps. Businesses working with Industry FinTech receive the IFT Seal to indicate that all of their compliance needs have been met — or exceeded — by IFT. “The IFT Seal represents that a company is embracing compliance and operating the right way,” asserts Fliderman.
The IFT Seal is a visual representation to put investors at ease that a company’s compliance needs are met by a trusted partner in Industry FinTech. Although some companies choose to do it on their own, partnering with a third-party administrator for compliance needs presents the safest situation for both investors and the business.