Policies¶

8 governance policies that constrain entity operations, workflow execution, and business rules across the finance & banking ontology. Each policy is defined in enterprise-knowledge/policies/ as a Markdown file.

Policy Summary¶

#	Policy	ID	Basel/Regulatory	Risk	Owner	Constrains
1	Credit Risk Policy	POL-CR-001	Pillar 1 (IRB) / IFRS 9	Critical	Chief Risk Officer	Loan_Account, Credit_Score, ECL_Staging, Risk_Rating
2	AML & KYC Policy	POL-AML-001	FATF / FinCEN	Critical	MLRO (Money Laundering Reporting Officer)	Customer_Master, AML_Alert, SAR_Filing, KYC_Document
3	Capital Adequacy Policy	POL-CAP-001	Basel III/IV Pillar 1	Critical	CFO / CRO	Capital_Component, RWA_Calculation, Regulatory_Return
4	Lending Policy	POL-LEND-001	Pillar 1 (Credit)	High	Head of Credit	Loan_Application, Loan_Account, Collateral, Guarantor
5	Collections & Recovery Policy	POL-COLL-001	Pillar 1 (Credit)	High	Head of Collections	Loan_Account, Repayment_Schedule, Collateral
6	Treasury & Liquidity Policy	POL-TREAS-001	Basel Liquidity (LCR/NSFR)	High	Treasurer / ALCO	Investment_Holding, Liquidity_Position, FTP_Rate
7	Data Freshness Policy	POL-DATA-001	BCBS 239	Medium	Chief Data Officer	All integration feeds
8	Operational Risk Policy	POL-OPRISK-001	Basel Pillar 1 (OpRisk)	High	Head of Operational Risk	Loss_Event, Control_Test, Incident_Record

1. Credit Risk Policy¶

ID: POL-CR-001 | Basel: Pillar 1 (IRB) / IFRS 9 | Systems: LOS, CBS

Rule Area	Key Rules
Risk Rating	All borrowers rated on 1-22 internal scale; annual review mandatory; downgrade ≥2 notches triggers SICR and immediate ECL recalculation
Concentration Limits	Single borrower: max 15% of Tier 1 capital; Single sector: max 25% of total exposure; Top 10 borrowers: max 15% of total book
EWS Thresholds	Red: 3+ signals simultaneously → credit committee escalation; Amber: 1-2 signals → RM notification; Green: monitored
SICR Triggers	DPD >30 days; Rating downgrade ≥2 notches; Restructured; Watchlist placement; Qualitative assessment by credit officer
ECL Model Governance	Annual model validation by independent model risk team; back-testing required; regulator/auditor approval before production use
Collateral Revaluation	Property: annual minimum, on LTV breach; Securities: daily mark-to-market; Gold: monthly; Vehicle: annual or on total loss
Write-Off	NPAs >3 years with exhausted recovery: recommend write-off; requires CRO + Board approval for >$1M

2. AML & KYC Policy¶

ID: POL-AML-001 | Regulatory: FATF / FinCEN / Local Regulator | Systems: AML, CBS, DMS

Rule Area	Key Rules
CDD Tiers	Simplified: low-risk, small accounts; Standard: all regular customers; Enhanced: PEP, high-risk country, unusual activity, >$1M relationship
KYC Renewal	Low risk: every 5 years; Medium: every 3 years; High: annually; Expired KYC: freeze high-risk transactions, notify RM
Transaction Monitoring	All transactions scored in real-time; thresholds per customer risk rating; structuring detection on multiple sub-threshold transactions
Sanctions Screening	All customers screened on onboarding and daily against OFAC, EU, UN, local lists; match score >85%: mandatory manual review within 4 hours
SAR Filing	Decision within 30 days of alert; filing within 30 days of decision; continuing SARs every 90 days for ongoing activity
PEP Management	PEP accounts require Senior Management approval; enhanced monitoring; annual review by compliance
Record Retention	All CDD records: 5 years after relationship ends; SAR records: 5 years after filing; transaction records: 7 years

3. Capital Adequacy Policy¶

ID: POL-CAP-001 | Basel: III/IV Pillar 1 | Systems: All

Rule Area	Key Rules
Minimum Ratios	CET1: ≥8.0% (regulatory 4.5% + CCB 2.5% + internal buffer 1.0%); Tier 1: ≥10.0%; Total Capital: ≥12.5%
Buffer Triggers	CET1 within 100 bps of minimum: restrict dividends; within 50 bps: suspend share buybacks + activate capital conservation plan
RWA Methodology	Credit: Standardized Approach (default), IRB Foundation (with regulatory approval); Market: FRTB-SA; OpRisk: Standardized Approach
Stress Testing	Quarterly internal stress tests; annual regulatory prescribed scenarios; results presented to ALCO and Board
Capital Planning	3-year forward capital plan; updated quarterly; includes dividend capacity, organic growth, and M&A scenarios
Regulatory Reporting	Capital returns filed within regulatory deadline (T+20 business days); zero tolerance for late filing
Model Risk	All capital models independently validated annually; material model changes require regulatory notification

4. Lending Policy¶

ID: POL-LEND-001 | Basel: Pillar 1 (Credit) | Systems: LOS, CBS, DMS

Rule Area	Key Rules
Approval Authority	<$100K: Credit Manager auto-approve (within score band); $100K-$1M: Credit Committee; $1M-$10M: Senior Credit Committee; >$10M: Board Credit Committee
LTV Limits	Home loan: max 80% (90% with mortgage insurance); Auto: max 85%; Commercial property: max 70%; LAP: max 60%
Debt-to-Income	Retail: max 50% DTI; SME: max DSCR 1.25x; Corporate: assessed case-by-case with minimum interest coverage 2.0x
Document Requirements	Income proof (last 2 years); Bank statements (6 months); ID proof (government-issued); Property docs (for secured); Financial statements (for business)
Pricing	Risk-based pricing: base rate + credit spread based on risk rating band; minimum margin: 150 bps over cost of funds
Document AI Confidence	>0.85: auto-populate application data; 0.7-0.85: flag for verification; <0.7: mandatory manual review
Loan Restructuring	Requires demonstrated financial difficulty; maximum 2 restructurings per loan; tenor extension ≤50% of original; triggers Stage 2 classification

5. Collections & Recovery Policy¶

ID: POL-COLL-001 | Basel: Pillar 1 (Credit) | Systems: CBS, LOS

Rule Area	Key Rules
Contact Strategy	1-30 DPD: automated SMS/email reminders; 31-60 DPD: outbound call campaign; 61-90 DPD: field visit + restructuring offer; 90+: legal notice
Recovery Prioritization	Score-based: recovery probability × amount at risk; self-cure predictions excluded from active contact
Restructuring Authority	Rate reduction: Branch Manager; Tenor extension: Credit Manager; Principal waiver <5%: Collections Head; >5%: Credit Committee
NPA Classification	90+ DPD: NPA classification mandatory; sub-standard: up to 12 months NPA; doubtful: 12-36 months NPA; loss: >36 months NPA
Provisioning Alignment	Collections outcomes feed back into LGD models and ECL calculations; recovery data used for backtesting
Legal Action	Initiated at 120 DPD for unsecured (>$10K); 180 DPD for secured; requires legal department approval
Write-Off Criteria	All recovery avenues exhausted; >3 years NPA; legal proceedings concluded; requires CRO approval

6. Treasury & Liquidity Policy¶

ID: POL-TREAS-001 | Basel: Liquidity (LCR/NSFR) | Systems: CBS, Market Data

Rule Area	Key Rules
LCR Target	Minimum 110% (regulatory 100% + 10% internal buffer); breach of 105%: alert Treasurer; breach of 100%: emergency ALCO
NSFR Target	Minimum 105% (regulatory 100% + 5% buffer)
HQLA Composition	Level 1 assets: ≥60% of HQLA stock; Level 2A: ≤40%; Level 2B: ≤15%; geographic and issuer diversification required
Duration Gap	Board-approved limit: ≤2.0 years; trigger for hedging review at ≥1.5 years
NII Sensitivity	±200 bps rate shock impact must be ≤10% of trailing 12-month NII; exceed: hedge within 5 business days
Interbank Limits	Single counterparty: max 5% of total assets; aggregate interbank borrowing: max 20% of total liabilities
FTP Methodology	Matched-maturity approach; rates published daily by close of business; stale rates (>2 days): interim rates from last valid curve

7. Data Freshness Policy¶

ID: POL-DATA-001 | BCBS 239 | Systems: All

Structured System SLAs¶

Source	Data	SLA
Core Banking System	Transaction_Ledger, Account balances	Real-time (<1 min for transactions; EOD for positions)
Core Banking System	Deposit_Account, Customer_Master	On-change + daily full sync
Salesforce FSC	SF_Account, Opportunity, Advisory_Interaction	Near real-time (<5 min)
Loan Origination System	Loan_Application, Loan_Account, Repayment_Schedule	Near real-time (<15 min)
AML / Transaction Monitoring	AML_Alert, Watchlist_Match	Real-time (alerts); daily (watchlist refresh)
Market Data	Yield_Curve, Macro_Indicator, Sector_Index	Intraday for rates; daily for macro

Unstructured Source SLAs¶

Source	Data	SLA
Document Management	KYC_Document, Loan_Document, Contract_Document	On-upload; processing within 30 min
Regulatory Feeds	Regulatory_Circular	Daily scan; critical: immediate

Staleness Rules¶

2x SLA gap: alert Data Engineering
3x SLA gap: mark data as stale; exclude from AI workflow inputs; notify risk management

8. Operational Risk Policy¶

ID: POL-OPRISK-001 | Basel: Pillar 1 (OpRisk) | Systems: All

Rule Area	Key Rules
Loss Event Capture	All operational losses >$1K must be recorded within 5 business days; Basel category classification mandatory
Material Loss Threshold	Loss >$500K: immediate CRO notification + formal root cause analysis; >$5M: Board notification within 24 hours
RCSA Cycle	Continuous (AI-assisted pre-population from loss data); formal review quarterly; full assessment annually
Control Testing	Key controls: quarterly testing; all controls: annual minimum; failed control: remediation plan within 30 days
KRI Thresholds	Set dynamically based on correlation with historical loss events; breach for 2+ periods: RCSA reassessment
Process Conformance	Critical processes (account opening, payments, lending): target >85% conformance; below 75%: formal investigation
Incident Management	Critical: 2-hour response SLA; High: 4-hour; all incidents: root cause within 10 business days; systemic patterns escalated to COO

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