If a compliance review uncovers a potential violation, what should be done?

• A. Do nothing and wait for regulators to contact you.
• B. Publicly announce the issue to clients.
• C. Report to proper authorities if required and take remedial action.
• D. Assign the issue to a different department for handling.

Answer: (C)

When a compliance review uncovers a potential violation, the priority is to address it through proper channels and fix any underlying issues. This means reporting to the appropriate authorities if required by law or regulation and taking remedial action to prevent recurrence. Acting quickly shows responsibility, protects clients and the market, and helps minimize regulatory risk. It also typically involves documenting findings, informing senior management, and implementing concrete fixes—such as updating policies, strengthening controls, providing training, and monitoring effectiveness to ensure the issue stays resolved.

Choosing to do nothing or waiting for regulators to contact you leaves the problem unaddressed and can invite penalties or harsher enforcement. Publicly announcing the issue to clients is not the standard response unless required by specific rules or circumstances, and simply reassigning the matter to another department doesn’t address the root cause or regulatory duties.