RegGenome: a common language on regulation for financial organizations

For multinational companies, keeping track of the world’s financial regulations can feel like catching confetti in the wind.

Complying with all the rules for different markets and regions is tough. Combining that with constant developments in areas such as cryptoassets, cybersecurity, anti-money laundering (AML) and environmental, social and governance (ESG) can make it feel unmanageable.

Furthermore, compliance teams often grapple with outdated infrastructure and applications that do not integrate between firms and jurisdictions.

No one has found a way to meet all these challenges. Until now.

The University of Cambridge Regulatory Genome Project (RGP) is creating a global structure for representing financial regulation across jurisdictions and business functions – and a root ontology of regulatory obligations and requirements, arranged in regulatory themes that can be made available to all as a public good, the Cambridge Regulatory Genome (CRG). Amongst others, these themes include Anti-money laundering (AML), Environmental, Social, and Governance (ESG), cybersecurity and data protection.

RegGenome classifies and organizes these millions of regulations in a dynamic, machine-readable way and offers ‘Cambridge Regulatory Genome compliant’ content to regulated firms and third-party applications in the form of the RegGenome Services. RegGenome content is vendor-neutral, so the content plugs into whatever application or system companies use and enables the operation of an efficient ecosystem – all powered by and speaking the same language. Vendor neutrality helps firms avoid getting locked into expensive software that is hard to replace, and removes entry barriers for new tech providers.

And the name? Just as human genome sequencing transformed our understanding of biology, sequencing a “regulatory genome” of global regulations will transform our understanding of how to manage risks and respond to them.

Huge efficiencies

Harnessing machines to read regulatory content brings immense efficiencies – and frees humans to think.

RegGenome does not plan to use a 100% automated process for interpreting regulatory obligations for organisations – there will always be a human in the loop. But it will help regtechs and application providers build solutions that can help compliance teams do their job more quickly and accurately. And the system will learn from what they do using machine learning techniques. For example, it will improve productivity and accuracy by making regulatory information increasingly structured.

In the RegGenome repository, every piece of regulation can be tagged, organised and made machine-readable. International firms can plug in and receive structured content to use however they want. A single thematic query can reveal all the information you need, in every relevant market, then filter it to compliance software and identify actionable pieces easily. A new AML requirement that once took months to cascade might now take days.

Machine readability also ensures best-in-class data and applications, allowing firms to deliver better services and lower costs to customers.

Interoperability

RegGenome is interoperable, which means it provides a common language and comparison basis between technologies. So if a firm and its regtech vendor both use RegGenome, they can integrate information into applications much more quickly, cheaply and efficiently compared to existing systems.

By avoiding any lock-in to existing technology, interoperability also increases market competition and innovation, and levels the playing field for companies in developing nations that want to expand internationally, but might previously have struggled to find the resources to research the necessary regulations.

Risk management and benchmarking

Nobody wants to be the outlier the regulator focuses on, and everyone would like to know where they stand with relation to their peers. RegGenome sends organisations precise updates whenever new or changing regulation is released in their area of interest. This mitigates risk by ensuring firms never miss a rule change and can adapt swiftly. 

Those looking to expand their business can simply map to the targeted function or region and see the regulatory requirements, whatever system they have.

Comparable and accessible information creates a golden source of regulatory content that firms can use across functions and geographies, and that is unique to RegGenome. This also helps companies compare international regulations, improve their understanding of compliance risk across their entire group, and benchmark it against peers.

RegGenome convenes Special Interest Groups to facilitate the collaboration of organisations on a specific topic, exchange knowledge, aggregate anonymised data and enable firms to benchmark risks and compliance against peers globally. Finally, increased digitisation also reduces risk by improving alignment between contracts, processes and data.

None of this would be possible without RegGenome’s development of digital standards that allow application-agnostic deployment.

Collaboration and feedback

Regulators and firms want to collaborate to improve regulations. The RGP is a Cambridge of University initiative that enables the convening of stakeholders to support this and its two founding members work to this effect.

In the Cambridge Judge Business School, the Cambridge Centre for Alternative Finance runs a preeminent regulatory innovation training course that over the past few years, the University has trained 1,400 regulators and established strong relations with many regulatory bodies building a strong base to this effect. It liaises with them to garner feedback on the Regulatory Genome information structure. In addition, RegGenome contributes to the development of a network of regulators, financial firms and RegTech vendors that allows them to provide feedback to each other through community engagement and Special Interest Groups. 

The firms working with RegGenome have the opportunity to feed back into the system through regular annotation, creating an enormously powerful model for constant improvement.

RegGenome, is the only organisation that can provide such intermediation and collaboration throughout the global market. The result will be constant improvement in the strength and practicality of taxonomies and classifiers.

Information integration

One of the most frequent questions about the RegGenome is whether its taxonomies suit a firm’s specific purposes. The beauty of it is that companies using it do not have to change the way they work – they just need to map their internal systems and workflow, usually with help from an integrator or consultant. But, as the system becomes more sophisticated, robotic process automation and similar tools will make this process faster and easier.

Another frequent question is from firms that use regulations written in foreign languages. For them, the RegGenome’s classifiers already work well on translated text. But it will keep developing machine translation capabilities that make it easier to work with text originally published in local languages.

What’s next?

The scale of the RegGenome project gives it huge potential to drive further innovation and efficiency. For example, it is already collaborating with some organisations to tailor their information, and plans to enable executable rules and information extraction technology of the type that big tech organisations use. This could increase productivity and reduce uncertainty in the process of translating regulatory requirements into internal compliance processes. In some areas, such as real-time transactions, it could enable ongoing automation of compliance.

RegGenome is looking for more firms to adopt this emerging de facto standard for organising the world’s financial regulatory information. In addition to the many compelling compliance and efficiency benefits above, firms will get first-mover advantage by using ‘RegGenome Compliant’ as a certification of adherence to this information structure.

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