Executive Summary
The Middle East is progressing toward becoming a global digital hub, necessitating a unified, technology-driven regulatory approach. The region currently faces challenges like regulatory fragmentation and the lag between technological advancements and evolving laws. To address these issues, PwC Middle East has introduced the concept of Digital Regulations as a Platform (DRaP), a tailored solution aimed at reducing reliance on traditional legal intermediaries and making legal services more accessible and cost-effective. DRaP offers benefits such as faster digital service delivery, proactive issue resolution, and enhanced compliance automation, which can revolutionize legal processes by increasing transparency, efficiency, and accessibility.
This whitepaper explores the current and future landscape of DRaP, focusing on its potential to transform legal regulation, compliance, and governance through the integration of Rules as Code (RaC) and Compliance Management Systems (CMS). It highlights how DRaP enhances the transparency, accessibility, and efficiency of regulatory compliance globally, citing research that suggests digital legislation can reduce compliance costs by up to 30%.[1]
The paper also emphasises the role of AI and machine learning in predictive compliance and risk management, helping adapt compliance systems to changing regulatory environments. However, it acknowledges practical challenges, such as technical barriers in coding discretionary laws, the complexity of accommodating diverse legal interpretations, and financial constraints affecting SMEs.
Introduction
Digital Regulation as a Platform (DRaP) is an emerging concept aimed at digitizing regulatory activities through rule-based algorithms, revolutionising regulatory compliance and enforcement. Originating from the concept of Regulations as a Platform (RaaP), first developed in Australia by Data 61[2], DRaP builds on RaaP's approach, which provides free and open access to legislation through public APIs, translating regulations into digital logic. DRaP incorporates two key elements, Rules as Code (RaC)[3] and Compliance Management Systems (CMS)[4] to ensure automated compliance and effective monitoring. This paper explores the adoption of DRaP, its challenges, and its implications for the public and private sectors.
DRaP Journey:
The evolution of DRaP stems from collaborative efforts dating back to the 1980s aiming to automate regulations by digitising laws using Prolog programming language[5]. The journey includes significant milestones, such as RaC platform to convert financial legislations and policies into machine-readable logic in the UAE, from risk monitoring (RegTech 1.0) to compliance management (RegTech 2.0) to advanced analytics and AI-driven solutions (RegTech 3.0).[6]
DRaP Concept
Digital Regulation as a Platform is comprised of two key elements:
Rules as Code (RaC)
RaC Convert regulatory rules into machine-readable logic to capture the intent and operation of regulation and standardise interpretation
Compliance Management System (CMS)
CMS helps organisations enforce and monitor legal requirements, in order to quality check these rules and endorse them for publication on an open platform
Digital Regulations as a Platform
DRaP benefits
A key trend involves providing Rules as Code (RaC) as a public service to aid citizens in understanding complex legal texts governing aid eligibility. Simple interfaces use machine-consumable rules to create tools and calculators for accessing government services, like eligibility assessment and benefit calculation.[7]
AI and ML algorithms revolutionise DRaP by analysing data to identify patterns, assess risks, and predict compliance issues. They improve decision-making with real-time insights, automate tasks, and boost efficiency in compliance management.[8]
Through adoption of cloud technology, DRaP regulatory solutions offer scalability, flexibility, and accessibility, allowing organisations to adapt to changing compliance needs.[9]
Compliance as Code (CaC) automates compliance checks, streamlining processes and reducing manual intervention. With organisations facing regulatory standards across diverse industries like banking regulations (for e.g., Payment Card Industry Data Security Standard for secure maintenance of credit card data) and data regulations (for e.g., GDPR for proper handling of personal data) compliance is crucial for maintaining trust and reputation.[10]
With the surge in data volumes handled by organisations, prioritising data compliance particularly in cases of cross-border data transfer has become imperative. This surge is driving the increased adoption of DRaP.[11]
DRaP adoption challenges
Implementation Challenges
Future implications
What's next
The evolving landscape of Digital Regulation as a Platform (DRaP) signifies a digital transformation in regulatory practices, driven by technological advancements. DRaP, which includes core components like Rules as Code (RaC) and Compliance Management Systems (CMS), aims to improve transparency, efficiency, and accessibility in regulation, thereby streamlining compliance and reducing regulatory risks across both public and private sectors. The integration of DRaP is essential for managing modern regulatory complexities and promises to revolutionise practices, making them more compliant and resilient.
Looking ahead, DRaP is expected to enhance legal understanding, streamline compliance, and speed up digital service delivery. However, challenges like legal and ethical implications, accountability concerns, and discrepancies between legislative text and code need to be addressed to ensure responsible adoption.
[1] Digital Legislation, Technology to re-imagine the legal and regulatory landscape, CSIRO Data 61
[3] https://www.cms.gov/medicare/payment/covid-19/coding-covid-19-vaccine-shots
[4] https://www.linkedin.com/pulse/evolution-building-compliance-software-visual-approvals-pty-ltd-g7cmc/?trk=article-ssr-frontend-pulse_more-articles_related-content-cardhttps://assets.kpmg.com/content/dam/kpmg/uk/pdf/2018/09/regtech-revolution-coming.pdf
[5] https://oecd-opsi.org/wp-content/uploads/2022/03/rac-wp.pdf https://salsa.digital/insights/what-is-rules-as-code
[6] Douglas W.Arner et al., FinTech, RegTech, and The Reconceptualization of Financial Regulation, 37 N.W. J.INT'i. L. & Bus https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2847806
[7] https://tekenable.ie/case-study/compliance-management-solution-for-itc/
[10] https://infosecwriteups.com/compliance-as-code-revolutionizing-regulatory-compliance-with-automation-dda2a5b30761 https://www.openpolicyagent.org/ https://docs.chef.io/inspec/ https://www.hashicorp.com/sentinel
