Black economy – What it is, how it damages businesses, and how to combat it
The black economy is a concept used to describe business activities that bypass formal rules and regulations. As such, businesses operating on the black markets are not necessarily illegal, but they can bear a heavy cost to society in that they often avoid paying taxes which creates increased competition for legal businesses. Thus, more businesses are investing in compliance management software to combat any financial crime and detect suspicious activities that could affect their reputation.
The black economy and its complexity
The black economy is a very complex phenomenon and consists of a variety of different markets with consequences for society. Common for all businesses within the black economy is that they escape tax payments. Consequently, they can provide their customers with cheaper services, but they also do not contribute to the country’s economy in the same way as businesses adhering to prevailing laws and regulations. As a result, countries’ economies will not reap the same benefits and legal firms will suffer intensified competition.
The black economy has been a major problem for many years, precisely because it is so difficult to catch criminals. It consists of many underground markets that escape institutional systems with the goal of making large sums of money. The black economy also makes it easier for companies involved in illegal and cruel criminal activities, such as human trafficking and drug dealing, to get away with it.
Reduce legal risks with a compliance management system
As the number of black markets continues to increase and it becomes increasingly difficult to combat criminal activities, regulations are becoming tougher. If companies do not adhere to the rules, they risk getting shut down and having to go through lawsuits, both of which are devastating for all types of businesses. This is why it becomes all the more important for businesses to invest in compliance management systems, such as Anti Money Laundering (AML) software, which helps track companies’ compliance activities, such as audits, inspections, and plans.
One industry-leading compliance system is Kyros AML Suite, which offers a cloud-based KYC and AML tool for businesses wishing to maintain compliance and avoid running into legal issues, Kyros AML. As such, Kyros AML Suite work to support companies in onboarding and monitoring customers as well as working in conjunction with their regular back office. All so that entrepreneurs can feel confident that they are not involved in criminal activities over which they have no control.
Kyros provides tailored services for a myriad of companies, such as real estate, retail, and e-commerce. Thanks to automated risk scoring, advanced transaction monitoring, and many other features, Kyros offers companies a helping hand in all matters related to compliance management. This allows businesses to devote more time to running their businesses, rather than worrying about running into legal issues and ruining their reputation.
Strengthen your company’s reputation
Trustworthiness is of uttermost importance when both potential clients and customers choose organizations, and this is where a clean record of compliance plays a partial role. The better your business maintains compliance, the better your reputation will be.
As such, a good compliance management system will strengthen your company’s reputation as it helps eliminate legal risks. Thanks to AML software, you will get in-depth insights into your company’s compliance processes and be able to meet necessary requirements, and uncover risks that might otherwise remain hidden and thus have evidence in the case of an investigation.
A positive reputation comes with many advantages. It indicates trustworthiness, which will increase your brand’s visibility and attract loyal customers, which in turn has a direct impact on sales. It also attracts hard-working and loyal employees, which is all the more important for companies in today’s competitive landscape. If you want your company to thrive, you need a positive reputation – which you can achieve with compliance management software that makes it possible for you to operate confidently!
The black economy is unlikely to vanish within a few years, but the strict regulations put in place to combat criminal activities relating to the black markets are constantly being reinforced. This means that formal businesses need to be more careful when reviewing their compliance processes to ensure they are adhering to current regulations. They must make sure to meet the ever-increasing demands and thus avoid negative consequences, which is easier said than done. Fortunately, there are experts within the field with many years of experience in compliance management and high-quality software to enable businesses to meet all organizational compliance needs.
Using software such as Kyros AML ensures compliance with all standards and regulations as well as legal requirements in a cloud environment, boosting your company’s reputation, increasing customer satisfaction, and bringing profit to your company in the long run. Thus, you can see compliance software as a long-term investment for your business which will generate value in the long run!