What does Compliance refer to in a financial context?

In a financial context, compliance is fundamentally about adhering to legal obligations and regulations. This encompasses a wide range of laws and guidelines that govern financial practices, including securities regulations, anti-money laundering laws, tax laws, and consumer protection laws. Compliance ensures that institutions operate within the framework of the law, promoting ethical conduct and accountability, which is essential for maintaining trust in financial systems.

Meeting industry performance metrics, conforming to commercial requirements, and achieving corporate social responsibility goals are important business practices but do not encapsulate the core concept of compliance. While these aspects can interrelate with compliance, they focus on performance outcomes, market standards, and ethical considerations rather than the legal and regulatory adherence required for compliance. Thus, the essence of compliance rests on the obligation to follow established laws and specifications in the financial sector.