Tech-forward compliance: Maximizing growth and minimizing risk in digital age

In today's rapidly evolving digital landscape, the integration of technology and compliance has become a pivotal factor in ensuring sustainable growth while mitigating potential risks. The concept of tech-forward compliance revolves around leveraging innovative tools, automation, and data-driven strategies to streamline regulatory adherence, enhance operational efficiencies, and foster growth opportunities. By harnessing cutting-edge technologies such as artificial intelligence, machine learning, and blockchain, businesses can proactively navigate complex regulatory environments. These technologies enable real-time monitoring, analysis, and adaptation to evolving compliance standards, thus minimizing risks associated with non-compliance. Embracing a tech-forward approach not only ensures adherence to regulations but also unlocks new avenues for expansion, empowering organizations to maximize their potential in the digital age while maintaining a strong foundation of regulatory integrity. Along the same lines, Sandeep Agrawal Director and Cofounder, Teamlease Regtech recently spoke to Dataquest.

DQ: Can you share insights into the latest innovations in RegTech and how these technologies are making compliance processes more efficient and effective for businesses?

Sandeep Agrawal: Over the last three decades, there has been a clear global trend towards governments working closely with the private sector on long-term projects under a Public Private Partnership (PPP) model. The approach adopted by GSTN and the Income Tax Department in India, where GST is filed via empanelled vendors, is one such RegTech innovation.While the government and different regulatory bodies work towards improving and strengthening the digital infrastructure in compliance, currently, the leading regtech organisations help corporate India comply better with SaaS tracking and automation products.

TeamLease RegTech (TL RegTech) is making significant investments in developing three product layers in the compliance space (Tracking, Automation and Filing). It will simplify corporations' adherence to the law and increase productivity and accuracy. As a result, businesses are free to concentrate more on growth rather than the regulatory burden. The Company envisions continuing to invest in the next 5 years and work on automating around 70% of the regulatory requirements to be automatically generated by the Platform without or with minimal manual intervention (similar to GSPs). The 03 Product Layers are described below:

Tracking Layer: With over 1,500 acts and 69,000 compliances, TL RegTech's legal compliance management platform (AVACOM) provides an extensive compliance database encompassing federal, state, and local laws. The platform offers rich dashboards, flexible/analytical reporting capabilities, online chat support, and mobile and web apps with high-security standards. It also facilitates a central repository of all compliance documents with simple extraction utilities and adds a layer of accountability with a required review mechanism. Additionally, TL RegTech ensures that regulatory updates are shared nearly instantly (usually within 48 hours of publication). This is controlled by a tech tool created internally that searches through more than 2,500 regulatory websites on a regular basis to find new notifications. 

Automation Layer: TL RegTech has created automation layers over the last five years for data processing and automated compliance document preparation for labour and secretarial compliances (such as labour registers & returns and secretarial compliance documents (like meeting related documentation, i.e. notices, agendas, minutes, resolutions, etc. and other compliance documents i.e. like annual filings & other e-forms). Additionally, the company has been working on automation layers for compliance document preparation for SEBI filings (XBRLs). With automation layers for these 03 regulators, the integrated platform can assist businesses in automating the creation of statutory records for over 45% of all compliance requirements. Further, the Company has also integrated the labour compliance automation platform with Payroll software to eliminate any manual interventions (i.e. as soon as the payroll is processed, most of the registers and returns are generated by the automation layer).

Filing Layer: The adoption of RegTech in India is expected to play a pivotal role in fulfilling the country's objective of alleviating the regulatory compliance challenges faced by businesses and enhancing the overall business environment. The integration of RegTechs into digital public infrastructure (DPI), the implementation of Unique Enterprise Number (UEN), Enterprise DigiLocker, and the utilisation of API-enabled straight-through filings are expected to reshape the regulatory landscape significantly.

DQ: TeamLease RegTech has a strong focus on technology-driven compliance. Could you provide a case study or example of a company that significantly improved its compliance efforts through your solutions and the measurable benefits they achieved?

Sandeep Agrawal: Our clients needed a compliance automation solution that could help them gain greater control over applicability, legal updates, and real-time status tracking. They were headquartered internationally and had a number of compliances driven by the parent. In addition, they were responsible to USFDA and other European Regulators, which also required meticulous tracking and management.

A team of 3 Compliance subject matter experts visited their Mumbai-based head office for a period of 1 week to conduct a thorough review of their business presence across India.

The implementation of AVACOM (TeamLease Regtechs’ Compliance Automation Solution) was initiated in three phases

Phase 1 - Information Discovery: 

This phase of the project focussed on understanding their business to establish the applicability of Acts and Compliances. Comprehensive information was collected via in-person interviews/meetings/discussions with the management, individual department heads, and other representatives in the company. The following items were collated:

Business Set up (Group, Entities, Locations, clients, number and nature of establishments, Industry, export)

Products (API Manufacturing)

Equipment and machines (Boilers, Pressure Vessels, Gas Holders, Chimneys etc.)

Establishment Types (Factories, R&D Center, Corporate Office etc.)

Mandatory repeatable items driven from their global headquarters

Internal Compliances (FDA, EMA, ISO Certifications etc.)

Phase 2 - Compliance Applicability Assessment:

TeamLease Regtech identified several Boilers, Pressure Vessels, Hoists and Lifts, Lifting tools and tackles, Gas Cylinders, Static and Mobile Pressure Vessels, Petroleum Storage Tanks, Chemical tanks, ETP (Effluent Treatment plant) & STP(Sewage Treatment Plant) among others. These equipment were located in various plants based in 8 locations, leading to the applicability of different Acts and Compliances.

The team identified over 140 applicable Acts with over 5,275 applicable compliances, including time-based and ongoing compliances.

Phase 3 - Implementation:

TeamLease Regtech assigned a 4 member team of subject matter experts to work with the client. The plan included physical visits to 6 states and 8 cities. Here are the key activities undertaken during the implementation phase:

Map the Client Organisation (Group, Entities, Sub-Entities, Locations, Departments)

Review identified applicable Acts and Compliances with respective department heads

Discuss identified gaps with department heads and compliance heads

Map Compliances to specific users based on their roles

Hands-on training sessions with user groups based on their locations and roles

Activation of the system for a predetermined go-live date

A total of 263 users were mapped and trained over a period of 12 weeks for Performer, Reviewer, and Management Roles. It has been over a year since the client has been on the system. The client has reported a significant maturity in their organisational compliance program. They have seen over 50% reduction in missed compliances. In addition, the Compliance officer now has access to the real-time status of over 5,000 compliances without spending any non-productive time on data collation and follow-ups. The assurance provided to the board has become more transparent and credible. There is a tangible reduction in their penalties and interest expenses arising out of delays. Our client is now on top of all the legal and regulatory changes within 24 hours of the release of the notification.

Our client has successfully migrated to a predictable, process-oriented and digital compliance management environment.

DQ: Blockchain is often lauded for its role in transparency. How does TeamLease RegTech see blockchain technology contributing to supply chain compliance and mitigating risks in the industries you serve?

Sandeep Agrawal: Entrepreneurs in India operate within a complex ecosystem. The regulatory landscape is dynamic, undergoing modifications more than 4,000 times annually. In addition to influencing employer compliance obligations in numerous ways, these modifications also affect penalties, duties, interests, and dates. OMs (official memorandums), notifications, government orders, gazettes, and circulars are utilised to disseminate the modifications across 2,233 distinct regulatory websites operating at the municipal, state, and federal levels. 

Employers are required to peruse the Foundational Act in addition to countless pertinent amendments published over an extended period in various documents not contained in a centralised repository. Consequently, the task of ascertaining the regulatory responsibilities of a business takes time and effort. By storing all regulatory documents on a public blockchain, an official, centralised, verified, and chronological database will be created that is accessible to all parties for the purpose of determining their compliance obligations. In the next era, it is imperative that all legislative documents, encompassing diverse draughts, public input, feedback, numerous iterations, ultimate enactment, pertinent regulations, and later modifications, be readily accessible and amenable for utilisation on the blockchain.

Blockchain technology presents a rational resolution for ensuring that digital documents maintain their integrity. All licenses, registrations, permissions, consent orders, returns, inventories, challans, payments, and notices can be digitally maintained and exchanged in accordance with a UEN (Unique Enterprise Number) as part of India's 21st-century compliance. The use of a blockchain ledger to store these documents can establish their authenticity and foster confidence among the involved parties. 

Presently, in order for an entrepreneur to establish a new factory in any state, they are required to print and submit a minimum of 5,000 pages of mandatory documentation. As required by regulation, this documentation must be self-attested, notarised, and stamped to establish its authenticity. This procedure is extraordinarily inefficient and costly to the environment. By storing all government approvals in a digital ledger, the data can be rendered extremely accessible, transparent, instantaneous, and secure. This will eliminate the necessity for tangible paper to be utilised as a means of communication.

Furthermore, the pertinent regulatory authorities will access these documents to facilitate renewals, reviews, and inspections, streamlining, expediting, and simplifying the enforcement process. Regulatory agencies can retain access to secure data pertaining to compliance in close proximity to real-time. This approach would enable regulatory bodies to assess information proactively rather than conducting post-hoc analyses. 

A proficient implementation of Blockchain technology has the potential to significantly diminish the duration, expenditure, and exertion devoted to regulatory reporting while concurrently enhancing the process's quality, precision, and assurance. This system will provide an immutable audit trail for all compliance actions and enhance data visibility. Every ledger entry on the blockchain will encompass comprehensive information, including the change's author, the time and date of its creation, and the change's contents. The digital signature will aid in verifying that the individual who possesses the private key is, in fact, the author of the transaction. Data authenticity and integrity can be verified during retrieval by the regulatory office or the compliance officer inside the organisation. Any instances of data corruption can be detected and rectified in an instant.

DQ: Automation is transforming compliance management. Can you share how your company's solutions are streamlining compliance processes for businesses, reducing manual efforts, and minimizing errors?

Sandeep Agrawal: TeamLease RegTech’s product offerings help organisations stay on the right side of the law. The product offerings can be classified into two main categories: Track and Automate.

Track:

AVACOM: This is the Company’s flagship product that helps track and manage the entire lifecycle of employer compliances across the law of the land.  With this SaaS product, users get real-time visibility of the status of their compliances with role-based access, automated workflow, and an integrated document management system. You also get automated alerts, reminders, escalations, and legal updates on your email, web and mobile platforms.

Contractor Compliance: A principal employer is responsible for its Contractor’s compliance, as they are accountable for all actions in their own organisation. Our contractor compliance management module is a SaaS product that helps corporations create a digital process to facilitate the effective management of compliances related to their contractors. The platform brings together the principal employer and the contractors in one platform that allows for automated workflows, enabling transparency, accountability, and accuracy in the contractor.

Structured Digital Database (SDD): An on-premise product for listed entities to stay on top of Insider Trading Regulations. This is a requirement by SEBI as per Reg 3 (5) of the SEBI Act. From time stamping to maintenance of historical data to custom report generation, this product meets the SEBI list of required features and more.

Automate:

Once the technology is adopted well and the objectives of a transparent and efficient compliance program are achieved, organisations carry the positive momentum to achieve more with the help of technology. That’s where our automation products come in. Our automation platforms help in improving a compliance program's accuracy, productivity and cost-effectiveness.

Board & Secretarial Compliance Automation (AVASEC): It is exclusively designed for the Secretarial department of an Organization and digitises several activities for a company secretary. This includes support in managing the Board and other Committee Meetings via the Platform and automatic generation of relevant meeting-related documentation (like Notice, Agendas, Minutes, Resolutions, CTC, etc.) and Compliance documents (like registers, select annual filings and e-forms).

Labour Compliance Automation (AVACOM Labour): The module offers an end-to-end automated solution for preparing all regulatory returns, registers and challans under all Labour Laws. The platform enables central HR teams to generate all state-specific statutory records at the click of a button. As a self-service solution, this platform equips the in-house teams to manage compliances without sharing sensitive employee information with external consultants. Additionally, the Platform is also integrated with Payroll Software.

DQ: Looking ahead, what do you believe will be the future trends in compliance technology, and how is TeamLease RegTech positioned to help organisations adapt to these changes?

Sandeep Agrawal: Although the goal of technology has always been to make life easier, in recent decades, technological advancements have altered how we go about our daily lives. These AI and ML-supported innovations have either simplified the tasks or done away with the need for human intervention. We have also been making significant investments in end-to-end automation for compliances, which includes using APIs to enable straight-through filings and automatically generating compliance documents with little to no manual input for multiple regulators.  

Currently, our automation layer assists organisations with the automated creation of compliance documents related to secretarial and labour laws. Additionally, we have been developing automation layers to generate compliance documents in accordance with SEBI regulations. Furthermore, we have been corresponding with different Central and State agencies regarding establishing a digital ecosystem for RegTech companies. This ecosystem will enable the smooth submission of regulatory returns through the platforms of authorised vendors. With minimal manual intervention, all of the aforementioned activities will enable end-to-end compliance automation, lowering the cost of compliance for organisations and raising the degree of compliance accuracy.