I recently had an opportunity to sit down with John Byrne, CEO of Corlytics, for a podcast recording. The episode is posted here in my Compliance and AI podcast. Corlytics sponsored the podcast. We had a fascinating conversation about the next steps forward for compliance professionals, exploring tools, insights, and strategies that help us not just react to regulatory changes but proactively embed compliance into the heart of business operations.
Corlytics has recently achieved ISO 42001 certification, a milestone that marks it as a true pioneer in the RegTech space. For those unfamiliar, ISO 42001 establishes rigorous standards for AI model testing, validation, and robust processes that protect against misuse and data vulnerabilities. Byrne emphasized that this certification demonstrates the company’s dedication to applying meticulous, methodical processes typically reserved for cloud computing security to the burgeoning field of AI. Given the increasing centrality of AI to operational infrastructure, John argued convincingly that managing AI risks should be as rigorous and robust as managing any critical business software.
We dove deeper into AI’s role in compliance, highlighting a shift from reactive detective strategies to proactive, predictive capabilities. Compliance, historically viewed as the “business prevention unit,” has undergone significant evolution. AI-driven solutions enable the considerable acceleration of compliance operations, leading to improved outcomes and enhanced traceability. This means compliance professionals can now focus their expertise on strategic issues rather than mundane, repetitive tasks.
Byrne also linked compliance with fundamental banking principles, reminding us that compliance is not a new concept, but rather, it is rooted in maintaining trust. Banking, at its core, is about trust, and the robustness of compliance directly affects this trust. This echoes the historical narrative that compliance is not merely about following rules but also about ensuring long-term business viability and customer satisfaction. Compliance, at its best, is good business.
One of the critical compliance risks in AI highlighted during our conversation was data poisoning, a growing and increasingly significant threat. Bad actors deliberately corrupt AI training data to manipulate model outputs, creating misleading results. John pointed out that managing this risk involves rigorous data provenance checks and cleansing techniques. The objective is not only to secure data but also to validate its accuracy and integrity continuously.
We also explored the distinction between large language models (LLMs) and small language models (SLMs). While LLMs like ChatGPT excel with vast datasets, SLMs are invaluable when privacy, specificity, and accuracy are paramount, such as in proprietary compliance controls within financial institutions. John’s insights into this nuanced approach are particularly critical for compliance professionals managing highly confidential or regulated information.
Moreover, our discussion touched on traceability and auditability, key concerns for compliance practitioners. AI solutions now facilitate real-time audit trails, enabling the immediate tracing of every compliance decision, control update, and policy shift back to their origins. The emphasis is clear that automation and digitization are not optional; they should be viewed as necessary to meet current regulatory expectations effectively.
Byrne provided a powerful case study example regarding dynamic traceability, from risk identification to response, highlighting how AI can dramatically compress timeframes. Traditionally, significant regulatory changes, such as those stemming from MiFID II, would take organizations months or even years to fully operationalize. Today, AI-driven systems can manage this lifecycle in seconds. Such rapid responsiveness not only ensures compliance but also provides strategic flexibility, which is crucial in our ever-changing regulatory landscape.
Recent geopolitical developments underscored the strategic potential of compliance as a proactive risk management function. The Trump Administration’s suspension of FCPA investigation and enforcement raises questions about the role of compliance in the absence of strict regulatory frameworks. A key compliance response is embedding compliance within core business operations, as this integration is a powerful enabler rather than a mere defensive posture. Once again, we see that effective compliance drives more efficient business operations, leading to greater profitability.
Finally, we discussed the future of RegTech, which Byrne believes will democratize compliance technology. Historically restricted to larger financial institutions, advanced compliance tech is now becoming accessible to smaller entities, leveling the competitive field. This democratization ensures that sophisticated compliance is no longer the privilege of only the largest, most resource-rich banks.
In wrapping up our conversation, it became clear that AI and compliance together represent not just a shift but a leap forward, transforming compliance from a cost center into a strategic business partner capable of driving significant organizational value. It’s an exciting time to be a compliance professional as we witness firsthand how AI innovation is reshaping our roles and the very nature of compliance itself.
Stay smart, stay ethical, and, as always, stay compliant. The future is here, and AI is powering it.
