Case Study

AI-Enabled Regulatory Compliance: Strengthening Controls, Traceability, and Audit Readiness

Strengthened the clarity, defensibility, and auditability of a major Canadian bank’s control environment through enhanced internal control documentation across regulatory and operational risk areas. Leveraged AI-enabled tools to accelerate analysis, support gap identification, and inform control uplift recommendations.

Identifying the Problem

Across the financial services industry, regulatory expectations continue to increase in complexity, requiring organizations to demonstrate clear ownership, traceability, and effectiveness across their control environments. Banks must not only identify applicable regulatory obligations, but also show that controls are appropriately designed, documented, mapped, tested, and aligned to recognized compliance and risk frameworks.

For large financial institutions, this work is often complicated by fragmented control inventories, inconsistent documentation, unclear accountability across lines of defence, and limited visibility into whether existing controls fully address regulatory and operational risk requirements.

Taking Action

Optimus supported a Big Five Bank’s enterprise-wide effort to identify regulatory obligations, map controls to requirements, assess alignment to compliance frameworks, and evaluate control effectiveness to determine the Bank’s ability to meet its regulatory imperatives.

Results that Speak for Themselves

Strengthened control defensibility and audit readiness through a consistent, COSO-aligned assessment approach and clearer alignment across the first and second lines of defence.
Reduced compliance risk by identifying and prioritizing control gaps and recommending practical new controls and enhancements.
Increased regulatory traceability by validating obligations, mapping them to existing controls, and establishing clearer ownership and coverage across business units.
Improved alignment between documented controls, supporting procedures, and operational practices, creating greater clarity around control intent, execution, and accountability.
Streamlined control assessments, improved mapping accuracy, and accelerated documentation through custom GPT-based automation tools.

How We Got There

The Challenge

The Bank needed to demonstrate that its lines of business were meeting applicable regulatory obligations. This required the Bank to confirm that obligations had been appropriately identified, assigned to the right business areas, mapped to relevant controls, and supported by effective documentation and testing.

The Bank also needed to assess whether existing controls were sufficiently designed to address identified regulatory risks and whether related procedures accurately reflected how controls were executed in practice. Given the scale of the initiative and the number of stakeholders involved, a consistent methodology and clear governance structure were critical to delivering the work efficiently and defensibly.

The Solution

Optimus combined clear governance, a phased delivery model, risk-based analysis, procedure uplift, and AI-enabled support to help the Bank strengthen compliance execution within an aggressive timeline.

Clear Governance and Phased Approach

Optimus established a phased approach that prioritized the work through a regulatory lens. The team worked with stakeholders across the three lines of defence to define governance, clarify roles, and align on delivery expectations.

The engagement focused on four core objectives:

Obligation mapping: confirming that regulatory obligations had been identified and assigned to the appropriate lines of business.
Control-to-obligation mapping: assessing whether controls were in place and mapped to demonstrate how obligations were addressed.
Control design: reviewing whether mapped controls were ready for testing and aligned with existing compliance frameworks.
Control testing readiness: supporting the Bank’s ability to evaluate whether controls were effective in demonstrating compliance with regulatory obligations.

Standardized Risk-based Approach

To support this work, Optimus applied the COSO framework to standardize risk identification associated with each obligation and assess whether existing controls addressed those risks. Where controls were incomplete, unclear, or misaligned, the team identified gaps and recommended control enhancements.

Procedure Alignment & Uplift

Optimus also supported the review and uplift of control procedures to ensure they accurately reflected control intent, execution steps, and accountability, improving consistency between documented controls and operational practices.

Leveraging AI

To address the engagement’s timeline pressures, Optimus incorporated AI-enabled support through custom agents [AP1] developed by Optimus and run within the Bank’s AI environment. These tools helped inform risk-based assessments, gap identification, and control uplift recommendations while maintaining alignment with the Bank’s internal requirements.

The Results

Optimus helped the Bank strengthen its regulatory compliance and control environment by creating greater clarity, consistency, and defensibility across its control documentation, procedures, and governance approach.

Through the engagement, the Bank gained a clearer view of how regulatory obligations connected to existing controls and where additional uplift was required. By reviewing control design, mapping obligations to controls, and assessing alignment to recognized frameworks, Optimus helped the Bank better demonstrate how its control environment supported compliance expectations.

The work also helped uncover areas where controls were missing, incomplete, or not fully aligned to regulatory obligations. Using a risk-based approach, Optimus prioritized these gaps and developed practical recommendations for new controls, control enhancements, and documentation improvements.

Beyond control design, Optimus supported the uplift of related procedures to ensure they more accurately reflected how controls were intended to operate in practice. This helped improve consistency between documented expectations, operational execution, and accountability across business units.

The engagement also established a more standardized and repeatable way to assess controls across the organization. With a COSO-aligned methodology and clearer governance across 1LOD and 2LOD stakeholders, the Bank improved its readiness for audit and regulatory review while building a stronger foundation for ongoing compliance management.

As a result, the Bank was better equipped to reduce regulatory risk, respond with confidence to scrutiny, and sustain a more consistent, accountable control environment across the enterprise.

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