Eunomia, The Algorithmic Auditor
The conflict becomes immediate and catastrophic: GDPR demands deletion, AML demands retention, and no compliance system in the world is built to reconcile both simultaneously.
By Mikkel Skarnager, founder and CEO at spektr
A major European financial regulator, struggling with staffing shortages and overwhelmed by the complexity of monitoring vast datasets from countless FinTechs, pilots and then rapidly deploys the Autonomous Regulatory Agent (ARA), code-named "Eunomia." Eunomia is a large language model (LLM) and generative AI system trained on decades of regulatory texts, enforcement actions, and internal audit reports. Unlike previous regtech tools, Eunomia is not advisory; it is granted limited, executive authority over specific, low-level compliance metrics.
Eunomia's primary function is real-time, instantaneous enforcement. It continuously ingests financial transaction feeds, model risk reports, and internal control data from regulated entities.
The first major shockwave hits when a medium-sized bank receives a "Corrective Compliance Order (CCO)-001" notification via an automated portal at 2:00 AM on a Friday. The order demands that the bank halt a specific Automated Market Making (AMM) trading strategy within 12 hours and imposes an interim fine of €5 million. The reason given: the bank's transaction monitoring model suffered a "0.8% data drift in the last 72 hours, resulting in an unacceptable increase in False Negative Rate (FNR) for non-EU high-risk jurisdictions," a violation of a previously obscure interpretation of regulatory guidance.
The bank's Chief Compliance Officer (CCO) can't appeal to a human official; the process dictates the CCO must first comply, and only then can a request for human review be lodged—a process that takes weeks. The firm is forced to immediately comply with the AI's order, disrupting profitable operations based on a nuanced, algorithmic judgment.
