AI-Augmented Compliance: A Three-Part Exploration - Part 2: New Legislation Alignment

Introduction

In the previous article, we explored how AI can evaluate existing policies against current legislation. Now, let's consider into another crucial application of AI in compliance: preparing for new legislation.

In a legislative landscape where 57 acts were passed in the UK in 2023 [1] and 89 bills introduced in Australia in 2024 [2] alone, compliance officers across the world face an uphill battle. Source: UK Parliament, Parliament of Australia

Use Case 2: Aligning with New Legislation

As regulatory landscapes evolve, organisations must continuously adapt to new laws and regulations. AI can play a pivotal role in this process, helping entities quickly understand and implement new compliance requirements. The diagram below shows how this works:

1. Loading the new act: When new legislation is introduced, the full text of the new act or regulation is input into the AI system, often directly from official government websites or legal databases.
2. Extracting main points: The AI analyses the text using natural language processing (NLP) techniques to extract the main points and key requirements of the new legislation. This process goes beyond simple summarisation, identifying specific obligations, deadlines, and potential impacts on various operations.
3. Expert input: Legal experts and relevant stakeholders review the AI-generated analysis, adding context and clarifying any ambiguities. This ensures the AI's understanding aligns with human expertise and industry practices.
4. Gap analysis: The AI compares the new requirements against existing policies and procedures, identifying areas that need updating or where new processes must be developed.
5. Creating relevant policies and procedures: Based on its analysis, expert input, and gap analysis, the AI assists in creating draft policies and procedures that align with the new legislative requirements. These serve as a starting point for compliance teams to refine and implement.

A Practical Example - Local Government Transparency Act

Let's consider a practical example in the context of a local government adapting to a hypothetical new Local Government Transparency Act:

Loading the legislation: The local council uploads the full text of the new Transparency Act into the AI system.        

Identifying main points: The AI generates a concise summary of the Act, highlighting key requirements such as public access to council meetings, publication of financial records, disclosure of officials' interests, and new standards for responding to freedom of information requests.        

Expert input: The council's legal team and department heads review the AI-generated summary. They add notes about specific interpretations relevant to their local context and highlight areas of particular importance for their council's operations.        

Gap analysis: The AI compares the council's existing procedures against the new Act's requirements. It identifies several gaps:        

• Current meeting minutes lack sufficient detail required by the new Act
• The process for publishing financial records isn't frequent enough
• The council's website doesn't have a dedicated transparency portal as mandated
• The freedom of information request process doesn't meet new response time standards

Policy creation: Based on the gap analysis, the AI drafts new policies and procedures to address the Act's requirements, such as:        

• Updated protocols for live-streaming council meetings
• New templates for disclosing councillors' financial interests
• Revised processes for publishing detailed budget information
• Enhanced procedures for handling freedom of information requests

Based on this analysis and the AI-generated drafts, the council can prioritise addressing these gaps to ensure compliance with the new Transparency Act, potentially avoiding penalties and improving public trust.

Conclusion

This example demonstrates how AI can efficiently process complex new regulations and assist in creating aligned policies and procedures. It enables organisations to proactively identify and address compliance issues, ensuring they're well-prepared for regulatory changes. Considering the high cost of compliance for

Our next article will explore how AI can be used to create virtual compliance experts, further enhancing an organisation's compliance capabilities.

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References

1. https://en.wikipedia.org/wiki/List_of_acts_of_the_Parliament_of_the_United_Kingdom_from_2023
2. https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Lists/Details_page?blsId=legislation%2Fbillslst%2Fbillslst_c203aa1c-1876-41a8-bc76-1de328bdb726