> ## Documentation Index
> Fetch the complete documentation index at: https://tonic-ai.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# 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:

```yaml theme={null}
- 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

```python theme={null}
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

```python theme={null}
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

```python theme={null}
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

```python theme={null}
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:

```python theme={null}
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

<ParamField body="POLICY_ENABLED" type="boolean">
  Enable policy engine. Default: `true`
</ParamField>

<ParamField body="POLICY_RULES_DIR" type="string">
  Directory containing policy rule YAML files. Default: `app/policies`
</ParamField>

<ParamField body="POLICY_RULES_PATTERN" type="string">
  File pattern for policy rules. Default: `*.yaml`
</ParamField>

<ParamField body="POLICY_ENGINE_VENDOR" type="string">
  Policy engine vendor (optional). Default: `""` (uses default engine)
</ParamField>

<ParamField body="POLICY_AUTO_RELOAD" type="boolean">
  Auto-reload policy rules on file changes (development only). Default: `false`
</ParamField>

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

***

## Policy Decision Handling

### Block Decision

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

### Flag Decision

```python theme={null}
elif policy_result.decision == "FLAG":
    workflow.priority = "high"
    workflow.state = WorkflowState.REQUIRES_REVIEW
```

### Allow Decision

```python theme={null}
# 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](/getting-started/configuration#policy-engine-configuration)
* [CDM Compliance](/compliance/cdm-compliance)
* [Policy Service Implementation](../../app/services/policy_service.py)
* [Policy Rules Directory](../../app/policies/)

***

**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/`