Using GenAI to support regulatory compliance

The fund industry is increasingly turning to technology for regulatory compliance. Advanced tools streamline the management of regulations, improve compliance monitoring, and aid in risk mitigation. Generative AI (GenAI), a subset of AI which refers to models capable of generating new and original content, is set to play a pivotal role in the evolution of regulatory compliance for investment funds. 

A challenging landscape of rapid regulatory changes and stringent compliance demands  

Regulatory compliance has intensified, especially in the EU, requiring fund managers to maintain an up-to-date and comprehensive source of regulatory information. Adapting to new laws, regulations or guidance, training staff, and managing compliance strategies demand significant resources and can strain operations, risking errors and business disruptions. However, the cost of non-compliance — legal penalties, fines, and reputational damage — remains a compelling incentive to meet these challenges. 

Fund managers require a thorough and dependable stream of current information, which is achieved through daily tracking, collection, and organization of various legal documents, reports, and guidelines from national and international regulators, standard-setting bodies, supervisory entities, and industry groups. Beyond just keeping an eye on existing and impending regulatory shifts, firms must grasp the specifics of regulatory changes: their requirements, scope, timelines, risks, and effects on business, among others.  

Technology – powered by GenAI – can be leveraged to support regulatory compliance 

In 2023, EY launched its AI platform, EY.ai, shortly after a substantial investment of $1.4 billion. The Luxembourg team subsequently developed a GenAI regulatory compliance solution tailored for investment fund firms, utilizing Microsoft Azure GenAI Services. The solution, which draws from EY’s comprehensive database of regulatory updates, streamlines the retrieval of regulatory information – including from both online sources, such as CSSF circulars, and internal sources depending on the customer need – and substantially reduces manual research, collation and writing efforts. Additionally, the solution incorporates EY’s “Investment Funds in Luxembourg”, the 600-page guide which has been serving as the reference guide for fund managers in Luxembourg and Europe.  

With this comprehensive database of regulatory updates, complemented by a GenAI chatbot and dedicated support from EY specialists, firms can autonomously sift through and organize extensive regulatory information from a multitude of sources. The laborious task of sifting through regulatory documents can be avoided, and pertinent updates and relevant information can be pinpointed with unparalleled speed and accuracy. This not only cuts the time and labor traditionally required but also enhances the precision of compliance efforts.  

In summary, the fund industry is being reshaped by cutting-edge technologies like GenAI, which play a critical role in simplifying regulatory compliance amidst a rapidly changing landscape. The introduction of AI platforms, such as EY.ai, provides investment fund firms with sophisticated tools to efficiently and accurately handle regulatory updates. These technological advancements not only reduce the time and effort traditionally associated with compliance tasks but also improve the accuracy of compliance measures. As the industry progresses, embracing these technologies becomes essential for firms to fulfill regulatory requirements while safeguarding their performance and reputation. 

How EY can help 

EY's standardized regulatory platform, powered by GenAI, is available for clients via subscription and complemented by a dedicated specialist regulatory team. It enables the continuous monitoring, documenting and reporting of the legislative landscape and publications of regulators and standard setters, across several financial sectors (banking & capital markets, asset management, insurance and others), and localities (countries in Europe, Americas, Asia and Africa).