Policy Compliance

Policy-as-code compliance engine and rule documentation

Policy Engine Overview

CreditNexus uses a policy-as-code engine for real-time compliance enforcement. All policy decisions are deterministic, auditable, and stored as CDM events.

Code Reference: app/services/policy_service.py, app/core/policy_config.py, app/policies/

---

Policy Engine Architecture

Policy Evaluation Process

1. Validation: Policy rules are loaded from YAML files
2. Calculation: Rules are evaluated against transaction data
3. Event Creation: Policy decisions are stored as CDM events

Code Reference: app/services/policy_service.py (evaluate methods)

Decision Types

Policy decisions can be:

• ALLOW: Transaction proceeds normally
• BLOCK: Transaction is blocked (highest priority)
• FLAG: Transaction is flagged for review

Decision Priority: BLOCK > FLAG > ALLOW

Code Reference: app/services/policy_service.py (decision handling)

---

Policy Categories

CreditNexus includes 18+ policy rules across 5 categories:

1. Compliance Policies

Location: app/policies/compliance/

Sanctions Screening

File: sanctions_screening.yaml

Rules:

• Block transactions with sanctioned parties
• Check LEI against sanctions lists

Code Reference: app/policies/compliance/sanctions_screening.yaml

---

2. Credit Risk Policies

Location: app/policies/credit_risk/

Basel III Capital Requirements

File: basel_iii_capital.yaml

Rules:

• Minimum capital adequacy ratios
• Risk-weighted asset calculations
• Capital buffer requirements

Code Reference: app/policies/credit_risk/basel_iii_capital.yaml

Collateral Requirements

File: collateral_requirements.yaml

Rules:

• Minimum collateral coverage ratios
• Collateral valuation requirements
• Collateral quality standards

Code Reference: app/policies/credit_risk/collateral_requirements.yaml

Creditworthiness Assessment

File: creditworthiness.yaml

Rules:

• Credit score thresholds
• Debt-to-income ratios
• Financial health indicators

Code Reference: app/policies/credit_risk/creditworthiness.yaml

Data Quality

File: data_quality.yaml

Rules:

• Data completeness requirements
• Data accuracy standards
• Data validation checks

Code Reference: app/policies/credit_risk/data_quality.yaml

IRB Ratings

File: irb_ratings.yaml

Rules:

• Internal ratings-based (IRB) requirements
• Rating validation
• Rating consistency checks

Code Reference: app/policies/credit_risk/irb_ratings.yaml

Model Validation

File: model_validation.yaml

Rules:

• Model validation requirements
• Model performance thresholds
• Model governance standards

Code Reference: app/policies/credit_risk/model_validation.yaml

Risk Rating

File: risk_rating.yaml

Rules:

• Risk rating assignment
• Rating migration rules
• Rating review requirements

Code Reference: app/policies/credit_risk/risk_rating.yaml

Stress Testing

File: stress_testing.yaml

Rules:

• Stress test scenarios
• Stress test frequency
• Stress test reporting

Code Reference: app/policies/credit_risk/stress_testing.yaml

---

3. ESG Policies

Location: app/policies/esg/

ESG Compliance

File: esg_compliance.yaml

Rules:

• Block missing ESG KPIs
• ESG reporting requirements
• ESG performance thresholds

Code Reference: app/policies/esg/esg_compliance.yaml

---

4. Green Finance Policies

Location: app/policies/green_finance/

Climate Resilience

File: climate_resilience.yaml

Rules:

• Flag high climate risk areas
• Require climate adaptation measures

Code Reference: app/policies/green_finance/climate_resilience.yaml

Emissions Monitoring

File: emissions_monitoring.yaml

Rules:

• Block facilities exceeding air quality limits
• Flag high emission areas
• Require emissions monitoring

Code Reference: app/policies/green_finance/emissions_monitoring.yaml

Pollution Compliance

File: pollution_compliance.yaml

Rules:

• Block critical pollution areas
• Flag pollution hotspots
• Require pollution mitigation

Code Reference: app/policies/green_finance/pollution_compliance.yaml

SDG Alignment

File: sdg_alignment.yaml

Rules:

• Promote SDG-aligned projects
• Flag low SDG alignment
• Require SDG improvement plan

Code Reference: app/policies/green_finance/sdg_alignment.yaml

Sustainable Infrastructure

File: sustainable_infrastructure.yaml

Rules:

• Require green infrastructure in urban areas
• Flag missing green roofs
• Promote sustainable infrastructure

Code Reference: app/policies/green_finance/sustainable_infrastructure.yaml

Urban Sustainability

File: urban_sustainability.yaml

Rules:

• Block high emission urban development
• Flag low green infrastructure urban
• Require urban sustainability mitigation

Code Reference: app/policies/green_finance/urban_sustainability.yaml

Vehicle Activity

File: vehicle_activity.yaml

Rules:

• Block high vehicle density urban areas
• Flag high traffic areas

Code Reference: app/policies/green_finance/vehicle_activity.yaml

---

5. Filing Compliance Policies

Location: app/policies/

Filing Compliance

File: filing_compliance.yaml

Rules:

• US SEC material agreement filing
• US CFIUS filing requirement
• UK Companies House charge filing
• UK NSIA filing requirement
• FR AMF foreign investment filing
• FR commercial court charge filing
• DE BaFin foreign investment filing
• DE commercial register charge filing

Code Reference: app/policies/filing_compliance.yaml

Filing Deadlines

File: filing_deadlines.yaml

Rules:

• Filing deadline approaching (critical)
• Filing deadline approaching (high)
• Filing deadline approaching (medium)

Code Reference: app/policies/filing_deadlines.yaml

---

6. Syndicated Loan Policies

Location: app/policies/

Syndicated Loan Rules

File: syndicated_loan_rules.yaml

Rules:

• Syndicated loan structure requirements
• Participation requirements
• Documentation standards

Code Reference: app/policies/syndicated_loan_rules.yaml

---

Policy Rule Format

Policy rules are defined in YAML format:

- name: block_sanctioned_parties
  when:
    any:
      - field: originator.lei
        op: in
        value: ["SANCTIONED_LEI_LIST"]
  action: block
  priority: 100
  description: "Block transactions with sanctioned entities"

Code Reference: app/policies/ (all YAML files)

---

Policy Evaluation Methods

Facility Creation Evaluation

policy_result = policy_service.evaluate_facility_creation(
    credit_agreement=agreement,
    document_id=doc.id
)

Code Reference: app/services/policy_service.py (evaluate_facility_creation)

Trade Execution Evaluation

policy_result = policy_service.evaluate_trade_execution(
    trade_data=trade_data,
    credit_agreement=agreement
)

Code Reference: app/services/policy_service.py (evaluate_trade_execution)

Loan Asset Evaluation

policy_result = policy_service.evaluate_loan_asset(
    loan_asset=asset,
    verification_results=results
)

Code Reference: app/services/policy_service.py (evaluate_loan_asset)

Terms Change Evaluation

policy_result = policy_service.evaluate_terms_change(
    old_terms=old_terms,
    new_terms=new_terms,
    credit_agreement=agreement
)

Code Reference: app/services/policy_service.py (evaluate_terms_change)

---

CDM Event Integration

All policy decisions generate CDM-compliant events:

policy_event = generate_cdm_policy_evaluation(
    transaction_id=agreement.deal_id,
    transaction_type="facility_creation",
    decision=policy_result.decision,
    rule_applied=policy_result.rule_applied,
    related_event_identifiers=[],
    evaluation_trace=policy_result.trace,
    matched_rules=policy_result.matched_rules
)

Code Reference: app/models/cdm_events.py (generate_cdm_policy_evaluation)

---

Policy Configuration

Environment Variables

POLICY_ENABLED · boolean

Enable policy engine. Default: true

POLICY_RULES_DIR · string

Directory containing policy rule YAML files. Default: app/policies

POLICY_RULES_PATTERN · string

File pattern for policy rules. Default: *.yaml

POLICY_ENGINE_VENDOR · string

Policy engine vendor (optional). Default: "" (uses default engine)

POLICY_AUTO_RELOAD · boolean

Auto-reload policy rules on file changes (development only). Default: false

Code Reference: app/core/config.py (lines 108-115), app/core/policy_config.py

---

Policy Decision Handling

Block Decision

if policy_result.decision == "BLOCK":
    raise HTTPException(403, detail={
        "status": "blocked",
        "reason": policy_result.rule_applied,
        "cdm_event": policy_event
    })

Flag Decision

elif policy_result.decision == "FLAG":
    workflow.priority = "high"
    workflow.state = WorkflowState.REQUIRES_REVIEW

Allow Decision

# ALLOW: Continue normally

Code Reference: app/api/routes.py (policy evaluation handling)

---

Policy Rule Management

Adding New Policies

1. Create YAML file in app/policies/ or appropriate subdirectory
2. Define rule with name, when, action, priority, description
3. Test rule using policy service
4. Deploy - rules are automatically loaded on startup

Policy Editor UI

CreditNexus includes a Policy Editor interface for managing rules:

Location: client/src/apps/policy-editor/

Features:

• View all policy rules
• Create new rules
• Edit existing rules
• Test rule evaluation

Code Reference: client/src/apps/policy-editor/, app/api/policy_editor_routes.py

---

Compliance Checklist

• ✅ 18+ policy rules implemented
• ✅ Policy-as-code architecture
• ✅ CDM event generation
• ✅ Real-time enforcement
• ✅ Audit logging
• ✅ Policy editor UI
• ✅ Deterministic evaluation

---

Additional Resources

• Configuration Guide
• CDM Compliance
• Policy Service Implementation
• Policy Rules Directory

---

Last Updated: 2026-01-14
Policy Rules: 18+ rules across 5 categories
Code Reference: app/services/policy_service.py, app/core/policy_config.py, app/policies/