This Small Business Innovation Research (STTR) Phase II project as a continuation of the Phase I effort, will develop alpha versions of the Regulatory Knowledge Base (RKB) products. The Regulatory Knowledge Bases will be tailored to classes of compliance problems within the financial services space, such as broker or trading compliance, or anti-money laundering. Addtiionally, they will include a complex regulatory ontology specific to the financial services industry and rule bases that reflect the latest regulations and best practices that govern analysis of alerts and compliance cases. The Regulatory Knowledge Base products will be sold in various formats and standards so they can be directly deployed on various commercial off-the-shelf reasoning engines.
Regulatory demands, as well as the increasing costs associated with financial crime, are placing increasing cost pressures on financial institutions. The burden of compliance is driving up operational costs. Financial services firms are seeking to improve the effectiveness, efficiency and return on investment of their compliance and risk management systems. The current knowledge management technologies and software tools cannot offer efficient customized procedures to deal with specific compliance cases. Therefore, there is a need for flexible knowledge-based systems, like Disciple-FS, and for Regulatory Knowledge Base products, that can offer help in solving specific cases while ensuring compliance with all the rules and regulations. These systems should also be capable of acquiring reasoning skills of their users to adapt their capabilities to deal with new cases. The prototype built during Phase I proved that the Disciple Technologies have the required functions and abilities to support development, utilization, and maintenance of regulatory knowledge bases. The prototype also helped to identify research and development goals for Phase II that we present in this proposal.
This STTR project was a collaborative effort of Exprentis, Inc., Learning Agents Center of George Mason University (GMU-LAC), and Howard University (HU). We have defined the "Regulatory Knowledge Base" (RKB) product in a broad sense so it covers all the means necessary to control or regulate operations of a business entity. RKB comprises of a structure and methods for: (i) Representation of the regulatory knowledge in such structured format that the applicable knowledge can be directly derived from regulatory documents and from expert’s experience and be embodied into the computer system in such a way that it is both understandable by humans and process-able by computer systems; (ii) Utilization of the regulatory knowledge which is its direct use to evaluate if corporate actions and events are compliant with the applicable regulations and policies; (iii) Maintenance of the regulatory knowledge where knowledge base structures are updated based on the experience and based on the changes introduced into the regulations in order to assure that the system uses the most recent and current regulations; (iv) Support for interfacing between the system and the user by a semi-structured natural language communication. RKB may be embodied in various types of representation formats residing on a computer-readable medium. In particular the types of applicable representation formats can be, but are not limited to, a combination of reasoning rules and vocabularies, a combination of reasoning rules and database models represented as entity-relationship diagrams, or a combination of reasoning rules and ontologies or semantic networks. The above principles defined as a result of this project created a foundation for preparation and filing of a patent application for the developed technology. The results of this STTR project are: a) Alpha/pilot version of the Regulatory Knowledge Base (RKB) product that contains an initial regulatory ontology specific to the financial services industry and to a class of regulatory business problems. It also contains rules that reflect the latest subset of regulations and best practices that govern analysis of alerts and compliance cases; b) Alpha/pilot version of the Regulatory Compliance Assistant (RCA) product that provides automated regulatory compliance services. The RCA main components are: RKB; a reasoning engine, and a set of interfaces allowing connection to other systems providing complementary services, including the RKB-RIF adapter. The first version of the RKB & RCA products had been initially developed with the Disciple-FS tool developed by GMU-LAC. RKB was later ported to a commercially available off-the-shelf rule-based engine and to a relational database. We have achieved the portability of the Disciple-defined knowledge base by re-structuring the ontology concepts and rules to fit spreadsheet-like rule editors. The Disciple-FS (Financial Services) product is the tool used to develop the first versions of the RKB and it is one of the platforms on which RKB can be deployed. The Disciple technology developed earlier by the GMU-LAC team has been extended and improved by the following new functionality included in the FS version: a) Off-line and on-line connections between Disciple-FS and external data sources, b) Various changes in the Disciple reasoning engine and in the architecture for better alignment with the RKB objectives. c) A text-based messenger utility that supports natural language interaction with RCA. The Howard University team supported the RKB portability task by a) research of semantic and knowledge representation standards and related tools supporting the RKB portability objectives, b) evaluation of selected off-the–shelf reasoning engines to determine their knowledge representation mechanisms and use of the knowledge representation standards, c) and research and design of RKB-RIF portability use cases. As part of the project reporting task, the HU team established project wiki web pages. This has been an excellent tool for collecting information and sharing research findings among the team members. The project wiki website will have a broader utilization for the educational purposes serving the Howard University student community.
