Regulators and financial services companies now have access to test the graph and see how regulation in a structured digital format works. The AI developments carried out by Clausematch underlying the release of the knowledge graph fundamentally transform the approach to the very understanding of regulation and how it can be delivered.

Clausematch has been involved in a series of projects in this domain with financial services regulators since 2019. Thus, the FSRA of ADGM launched proofs-of-concepts in the digital regulation field where Clausematch was working on knowledge graphs and API-enabled rulebooks digitising ADGM’s crypto regulation. The joint team reimagined the regulatory framework by taking the content of regulatory requirements, automatically categorising them using advanced AI models, creating tags focused on regulatory concepts, obligations and expectation.

With digital regulatory rulebooks, financial institutions will be able to gain a deeper contextual understanding of the current applicable legislation and apply requirements more effectively and efficiently. The knowledge graph will become a source of digitised rules available for the use of decision automation systems. With the help of AI models, the knowledge graph will extract the understanding of regulations and embed it in a structured, dynamic, machine-executable form. Eventually, this will enable more institutions and firms to foster greater governance practice and transparency in their daily operations being compliant by design.

Vladimir Ershov, Head of Data Science and Machine Learning at Clausematch, said: “There is a growing sense that authorities need to work together to regulate the world more effectively, learn from and leverage each other’s experiences, and avoid silos of expertise and skills. By introducing dynamic knowledge graphs in open source, Clausematch proposes an approach where the regulator first digitises its very understanding of regulation by creating models for tagging and for relation extraction and then, these models are released within the regulations for regulated companies. Thus, any company can receive an in-house regulatory advisor to carry on with taxonomy and rules interpretations.”

Speaking on the collaboration, Evgeny Likhoded, CEO and Founder at Clausematch, said: “Regulators need to become active advocates of a new structured approach to regulatory texts. When regulations are digital, it gives a tremendous advantage and capability to businesses to achieve an entirely new level of compliance and transparency. We have been working on these developments since 2019 and we are proud to be releasing the results in an open domain as this can take the industry forward much quicker. Working with regulators and financial services institutions, we are committed to continue to innovate and take compliance to the next level. The more regulators align with this vision of structured machine-readable regulations, the faster we can propel the industry to improve and significantly reduce the cost of compliance.”

It is well known that AI systems can process large amounts of data. The number of processes is increasing and growing. It is necessary to automate the deep analysis of content produced by both parties: the regulators and the regulated firms. By training AI for rule interpretation tasks we can capture the understanding, the very meaning of regulation out of people’s heads and put it into digital form so that it can be copied and reproduced an unlimited number of times.

Yan Shtefanets, VP of Product at Clausematch, added: “It is humans who created complexity in dealing with regulation: different taxonomies, concepts. As a result, we needed to come up with a way to solve it. Collaboration with regulators is one of the most important ways to overcome this on a global level. Each regulator’s publication of a new rule or guidance will make it available as structured datasets of regulation in the knowledge graph format, rather than PDF documents. This will make a significant difference because it will allow businesses to adopt changes more quickly, perform gap analysis, and automate impact assessments."

With the digital regulatory rulebooks, financial institutions will gain better contextual understanding of legislation and apply requirements more effectively and efficiently. The use of technology and innovative RegTech solutions will enable more institutions and firms to foster greater governance practice and transparency in their daily operations.

The elements of the newly released project are already in use in financial services and beyond. Clausematch’s AI capabilities benefit customers in a number of ways. The trained models are helping clients identify relationships between internal policies, procedures, obligations, and regulations, which allows them to understand gaps and manage regulatory changes more efficiently. Furthermore, these AI capabilities enhance the policy writing experience by managing consistency and removing contradictions throughout the content. This technology promotes better content comprehension by making it easier to search for, access, and consume. It accomplishes this by allowing users to find answers, not documents.

Digitizing regulation provides unparalleled advantages to consumers and businesses, helping to meet changing requirements and improve efficiency.

To highlight this development and its impact, Clausematch also published a scientific paper on the application of knowledge graph technologies for regulations.