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Comply with AI | Indian Journal of Business Law

ALegal compliance is mandatory to keep businesses safe and avoid negative consequences such as penalties, disqualifications, forfeiture of licenses, fines and lawsuits. A thorough knowledge of legal compliance is necessary to minimize the risk associated with non-compliance.

Indian laws and regulations are not static and can change frequently. Compliance officers must track changes to dates, deadlines, forms, fees and interests, penalty calculations, additions of compliance items, rare removals of compliance items, and the introduction of new laws. Of the changes to the law between March 2020 and December 2021, about 2,600 updates came from central government and about 900 from state governments.

Several cement manufacturing companies have faced various non-compliance issues related to overtime, indoor air quality and legal metrology. Some factory inspectors, in a disturbing trend, have issued lengthy show cause notices to factory occupants (usually general managers or chief operating officers) citing various insignificant statutory non-compliances.

To overcome these hassles, industries have much to gain from the multiple technology options available today for managing compliance. To cope with the growing list of regulatory obligations, automation offers precision, efficiency and, above all, ease of use.

Automation software such as Compfie, from Aprajitha, and Legatrix are user-friendly and up-to-date for in-house lawyers.

An in-house lawyer’s understanding of the business is as important as their understanding of the law. For compliance automation, the role of the corporate lawyer is critical, as they act as a bridge between the automation implementation team and corporate departments such as human resources and tax . In the following activities, the corporate lawyer plays a leading role in implementing compliance automation:

Automation can increase compliance efficiency and improve oversight, as required by regulators. It relies on technologies such as artificial intelligence (AI) to continuously check the compliance of systems. Automation replaces manual processes and manual tasks such as risk assessments, alerts and notifications, streamlining compliance workflows and reducing process redundancy.

ENCOURAGE TRUST

Legal departments of companies of all sizes around the world are rethinking the way they work and looking for ways to radically improve the performance of their processes to optimize compliance activities.

When an organization automates compliance, it makes processes more accurate and eliminates errors that can occur when processing information. This reduces work-related anxiety by eliminating compliance reporters’ fears or worries about misreporting incidents.

Human error is the biggest obstacle to maintaining successful validation and compliance operations. For example, every individual, firm, partnership or corporation that prepackages or imports any commodity for sale, distribution or delivery must authorize its directors to exercise all powers and measures to prevent the commission of an offense under the Act. of 2009 on legal metrology.

But in most organizations, no administrator is appointed to do this. Employees may perceive that living with errors is an acceptable business practice. The number of errors can increase due to the “mushroom effect”, which spreads to other parts of the business and destroys trust. Organizations are then likely to become more dependent on third-party contractors and consultants to resolve issues, thereby increasing costs.

Organizations need to be aware of new regulations for accountability purposes. Automated programs are equipped to immediately implement new compliance standards as they are introduced. Most automated programs also provide real-time tracking of current compliance and audit statuses on a convenient dashboard.

REPAIR

Automation organizes the messy processes within a business so that no step is overlooked. Compliance officers have a myriad of responsibilities and therefore can accidentally misplace or misreport information. Automated systems remove this burden, allowing officers to focus their efforts on other aspects of business compliance.

Steps and framework for setting up automated compliance processes

In-house legal counsel or compliance officers ensure that a business operates legally and ethically while achieving its business goals. They are responsible for developing compliance programs, reviewing company policies and advising management on potential risks.

It is their responsibility to regularly audit company procedures, practices and documents to identify any weaknesses or risks, and to create and manage effective action plans in response to audit findings and compliance violations. .

Automation can be customized to meet national and central regulations, which is especially important for companies with a large geographic footprint. Whenever compliance standards and regulations change, the system can integrate the new information in real time.

The shift to remote work during the pandemic has affected compliance due to the lack of a central repository for non-automated compliance declarations and difficulties in controlling the compliance mechanism. The majority of businesses that have transitioned to automated processes are navigating smoothly, while those that still rely on manual processes have fallen on hard times.

ASSUME AN ADVISORY ROLE

Automation saves senior executives time, money, and relationships with their business by continuously and automatically staying up to date with the latest regulations. Running an automated program is more efficient than relying on employees to run every process with precision. Although automation does not eliminate the need for compliance officers, it does reduce costs because it is less costly than paying multiple employees to manually oversee each process.

Since automation is more adept at processing large amounts of data in a short time, it gives compliance officers comprehensive insights on how to improve the ethics and performance of organizations. Responsibility for performing mundane tasks is shifted to the program and the compliance officer can act more like an advisor in finding and resolving issues.

When compliance standards are checked manually, an employee must enter data weekly, monthly, or annually, as required. This leaves room for mistakes that can go unnoticed. An automated system constantly monitors the data, immediately alerting officers if something is out of place.

Compliance automation tools create a repository of permits and licenses in one place and generate various types of reports, such as performance, legal, and task compliance reports. An organization can define risks as critical, high, low, medium, and very low, and gain better control by customizing task frequency.

Automation is the future of compliance management, but the role of compliance officers is equally essential in guiding the process.


Subhadeep Bhowmik is Deputy Director General of the Legal Department of MP Birla Group.