Closing Compliance Review Automation
Automate the review of 50-100 closing documents in minutes instead of hours. This guide shows you how to build an intelligent compliance review system that verifies document presence, validates expiration dates, checks policy compliance, and flags inconsistencies—eliminating post-closing oversights and accelerating funding.
Overview
Time Savings: 88% reduction in compliance review time (6 hours → 45 minutes per closing) Complexity: Advanced Prerequisites: Familiarity with closing requirements, document types, and compliance policies
Blocks & Tools You'll Use
Core Blocks
- Agent Block - For intelligent document classification, policy matching, and risk flagging
- Knowledge Base Tool - To store closing requirements, document templates, and compliance policies
- Vision Tool - To extract text and metadata from PDFs, scanned documents, and images
- File Tool - To ingest and manage closing document packages
- Function Block - For custom Python logic to validate dates, check document presence, and calculate compliance scores
- Condition Block - To route closings based on compliance status (approved, needs review, critical issues)
Supporting Tools
- Response Block - To deliver compliance reports
- Mail Tool - To send compliance clearance or issue notifications to closing teams and borrowers
- Slack Tool - For real-time alerts when critical compliance issues are detected
Workflow Overview
Document Upload → Classification → Policy Matching → Risk Flagging → Remediation Tracking → Compliance Clearance
Step 1: Document Upload & Intake
Create a centralized intake system where borrowers or counsel upload all closing documents.
File Upload Configuration
Supported formats:
- PDF documents (most common)
- Scanned images (JPEG, PNG, TIFF)
- Microsoft Word documents (DOCX)
- Email attachments (EML, MSG)
Intake structure:
Closing Package ID: {unique_identifier}
Borrower: {borrower_name}
Loan Amount: {amount}
Closing Date: {expected_closing_date}
Documents: [uploaded_files]
Document Organization
def organize_closing_package(uploaded_files, borrower_name, loan_id):
"""
Organize uploaded closing documents into a structured package.
Returns a package manifest with metadata.
"""
package = {
'package_id': f"CLOSE-{loan_id}-{datetime.now().strftime('%Y%m%d')}",
'borrower': borrower_name,
'upload_timestamp': datetime.now().isoformat(),
'total_documents': len(uploaded_files),
'documents': []
}
for file in uploaded_files:
doc_metadata = {
'filename': file['name'],
'file_type': file['extension'],
'file_size_kb': file['size'] / 1024,
'upload_order': len(package['documents']) + 1,
'file_path': file['path']
}
package['documents'].append(doc_metadata)
return package
# Example output:
# {
# 'package_id': 'CLOSE-12345-20250115',
# 'borrower': 'Acme Manufacturing LLC',
# 'upload_timestamp': '2025-01-15T14:30:00',
# 'total_documents': 47,
# 'documents': [...]
# }
Step 2: Intelligent Document Classification
Use an Agent with Vision Tool to automatically classify each document by type.
Agent Configuration for Classification
System Prompt:
You are a closing document specialist identifying and classifying loan closing documents.
DOCUMENT TYPES TO IDENTIFY:
**Credit Documents:**
- Credit Agreement / Loan Agreement
- Promissory Note
- Security Agreement
- Guaranty Agreement
- Subordination Agreement
**Corporate Documents:**
- Board Resolution / Board Consent
- Certificate of Good Standing
- Articles of Incorporation / Organization
- Operating Agreement / Bylaws
- Certificate of Authority
**UCC & Lien Documents:**
- UCC-1 Financing Statement
- UCC-3 Amendment
- Lien Search Results
- Title Insurance Policy
**Insurance Documents:**
- General Liability Insurance Certificate
- Property Insurance Certificate
- Business Interruption Insurance
- Workers' Compensation Insurance
- D&O Insurance (if applicable)
**Financial Documents:**
- Financial Statements (most recent)
- Tax Returns
- Accounts Receivable Aging
- Inventory Reports
**Legal Opinions:**
- Legal Opinion from Borrower's Counsel
- Title Opinion (if real estate)
**Other Closing Documents:**
- Closing Checklist
- Compliance Certificate
- Corporate Authority Certificate
- Legal Entity Identifier Documentation
TASK:
For each document, identify:
1. Document type (from list above)
2. Document name/title
3. Dated date (when the document was executed or dated)
4. Expiration date (if applicable - e.g., insurance certificates, board resolutions)
5. Key parties mentioned (borrower, lender, guarantors, insurers)
6. Any unusual or non-standard provisions that require attention
OUTPUT FORMAT (JSON):
{
"document_type": "...",
"document_name": "...",
"dated_date": "YYYY-MM-DD",
"expiration_date": "YYYY-MM-DD" or null,
"parties": ["...", "..."],
"key_terms": ["..."],
"requires_attention": true/false,
"attention_reason": "..." or null,
"confidence_score": 0.0-1.0
}
Use Vision Tool to extract text from PDFs and images. If document type cannot be determined with high confidence, flag for manual review.
Tools Enabled:
- Vision Tool (to read PDF text, tables, and scanned documents)
- File Tool (to access uploaded documents)
Example Output:
{
"document_type": "General Liability Insurance Certificate",
"document_name": "Certificate of Liability Insurance - Acme Manufacturing",
"dated_date": "2025-01-10",
"expiration_date": "2026-01-10",
"parties": ["Acme Manufacturing LLC", "ABC Insurance Company", "First National Bank (Certificate Holder)"],
"key_terms": ["$2,000,000 General Aggregate Limit", "$1,000,000 Each Occurrence"],
"requires_attention": false,
"attention_reason": null,
"confidence_score": 0.95
}
Batch Classification Logic
def classify_all_documents(package, agent_block):
"""
Run classification agent on all documents in the closing package.
Returns classified document inventory.
"""
classified_docs = []
for doc in package['documents']:
# Call Agent Block with Vision Tool enabled
classification = agent_block.run(
file_path=doc['file_path'],
instructions="Classify this closing document and extract key metadata"
)
classified_docs.append({
'original_filename': doc['filename'],
'classification': classification,
'review_status': 'pending_policy_check'
})
return classified_docs
Step 3: Compliance Policy Matching
Store your closing requirements in a Knowledge Base and use an Agent to verify policy compliance.
Knowledge Base Setup - Closing Requirements
# Closing Requirements Policy
## Required Documents for All Closings
### Credit Documentation
1. **Executed Credit Agreement** - Must be fully executed by all parties
2. **Promissory Note** - Executed by borrower
3. **Security Agreement** - Executed, covering all collateral
4. **Guaranty Agreements** - One per guarantor, fully executed
### Corporate Documentation
1. **Board Resolution** - Must be dated within 90 days of closing
2. **Certificate of Good Standing** - Must be dated within 30 days of closing
3. **Corporate Authority Certificate** - Signed by corporate secretary
### UCC Filings
1. **UCC-1 Financing Statements** - Filed in all applicable jurisdictions
- Must cover borrower's state of incorporation
- Must cover all states where borrower has operations or assets
2. **UCC Search Results** - Showing no prior liens (or acceptable subordinations)
### Insurance
1. **General Liability Insurance** - Minimum $1,000,000 per occurrence
- Certificate must be dated within 30 days of closing
- Lender must be named as additional insured
- Must be effective on or before closing date
2. **Property Insurance** - Covering all collateral at replacement value
- Lender must be named as loss payee
3. **Business Interruption Insurance** - Minimum 12 months coverage (for loans > $5M)
### Financial Documentation
1. **Most Recent Financial Statements** - No older than 90 days
2. **Tax Returns** - Most recent filed returns
3. **Compliance Certificate** - Demonstrating compliance with all financial covenants
### Legal Opinion
1. **Legal Opinion from Borrower's Counsel** - Covering:
- Corporate existence and authority
- Enforceability of loan documents
- No conflicts with existing agreements
- UCC filing effectiveness
## Expiration Date Requirements
- **Insurance Certificates:** Must be current and not expire within 30 days of closing
- **Good Standing Certificates:** Must be dated within 30 days of closing
- **Board Resolutions:** Must be dated within 90 days of closing
- **Financial Statements:** Must be no older than 90 days from closing
## Critical vs. Warning Issues
**Critical Issues (Block Closing):**
- Missing executed credit agreement, note, or security agreement
- Missing or expired insurance certificates
- UCC filings not completed in all required jurisdictions
- Board resolution older than 90 days
- Legal opinion missing or incomplete
**Warning Issues (Requires Review but Doesn't Block):**
- Financial statements older than 60 days (but less than 90)
- Minor inconsistencies in party names across documents
- Insurance coverage slightly below policy minimums (within 10%)
**Informational Issues (Good to Know):**
- Non-standard covenant language
- Additional documents provided beyond requirements
Agent Prompt for Policy Matching
System Prompt:
"You are a closing compliance specialist verifying that all required documents are present and compliant with internal policy.
INPUT:
- Classified document inventory (from Step 2)
- Closing requirements policy (from Knowledge Base)
- Borrower details and loan structure
TASK:
1. Check that all required document types are present
2. Verify that documents are current and not expired
3. Confirm that key terms meet policy minimums (e.g., insurance coverage amounts)
4. Identify missing documents
5. Flag expired or soon-to-expire documents
6. Flag non-compliant terms
OUTPUT FORMAT (JSON):
{
"compliance_summary": {
"total_required_documents": 0,
"documents_present": 0,
"documents_missing": 0,
"documents_expired": 0,
"documents_non_compliant": 0,
"overall_status": "APPROVED" | "NEEDS_REVIEW" | "CRITICAL_ISSUES"
},
"missing_documents": [
{
"document_type": "...",
"required_by_policy": true,
"severity": "critical" | "warning"
}
],
"expired_documents": [
{
"document_type": "...",
"expiration_date": "YYYY-MM-DD",
"days_until_expiration": 0,
"severity": "critical" | "warning"
}
],
"non_compliant_documents": [
{
"document_type": "...",
"issue": "...",
"policy_requirement": "...",
"actual_value": "...",
"severity": "critical" | "warning" | "informational"
}
],
"compliant_documents": [
{
"document_type": "...",
"status": "compliant"
}
]
}
Query the Knowledge Base for closing requirements. Compare the classified document inventory against these requirements. Categorize issues by severity."
Python Function for Compliance Validation
from datetime import datetime, timedelta
def validate_document_compliance(classified_docs, policy_requirements, closing_date):
"""
Validate that closing package meets all policy requirements.
Returns compliance report with missing, expired, and non-compliant documents.
"""
compliance_report = {
'compliance_summary': {
'total_required_documents': len(policy_requirements['required_documents']),
'documents_present': 0,
'documents_missing': 0,
'documents_expired': 0,
'documents_non_compliant': 0,
'overall_status': 'APPROVED'
},
'missing_documents': [],
'expired_documents': [],
'non_compliant_documents': [],
'compliant_documents': []
}
# Create inventory of document types present
docs_by_type = {}
for doc in classified_docs:
doc_type = doc['classification']['document_type']
if doc_type not in docs_by_type:
docs_by_type[doc_type] = []
docs_by_type[doc_type].append(doc)
# Check for missing documents
for required_doc in policy_requirements['required_documents']:
if required_doc['type'] not in docs_by_type:
compliance_report['missing_documents'].append({
'document_type': required_doc['type'],
'required_by_policy': True,
'severity': required_doc.get('severity', 'critical')
})
compliance_report['compliance_summary']['documents_missing'] += 1
else:
compliance_report['compliance_summary']['documents_present'] += 1
# Check for expired documents
closing_date_obj = datetime.strptime(closing_date, '%Y-%m-%d')
for doc_type, docs in docs_by_type.items():
for doc in docs:
expiration_date = doc['classification'].get('expiration_date')
if expiration_date:
exp_date_obj = datetime.strptime(expiration_date, '%Y-%m-%d')
days_until_exp = (exp_date_obj - closing_date_obj).days
# Flag if already expired or expires within 30 days
if days_until_exp < 0:
compliance_report['expired_documents'].append({
'document_type': doc_type,
'expiration_date': expiration_date,
'days_until_expiration': days_until_exp,
'severity': 'critical',
'issue': f'Document expired {abs(days_until_exp)} days ago'
})
compliance_report['compliance_summary']['documents_expired'] += 1
elif days_until_exp < 30:
compliance_report['expired_documents'].append({
'document_type': doc_type,
'expiration_date': expiration_date,
'days_until_expiration': days_until_exp,
'severity': 'warning',
'issue': f'Document expires in {days_until_exp} days'
})
# Determine overall status
if compliance_report['compliance_summary']['documents_missing'] > 0:
if any(d['severity'] == 'critical' for d in compliance_report['missing_documents']):
compliance_report['compliance_summary']['overall_status'] = 'CRITICAL_ISSUES'
if compliance_report['compliance_summary']['documents_expired'] > 0:
if any(d['severity'] == 'critical' for d in compliance_report['expired_documents']):
compliance_report['compliance_summary']['overall_status'] = 'CRITICAL_ISSUES'
if compliance_report['compliance_summary']['overall_status'] != 'CRITICAL_ISSUES':
if (compliance_report['compliance_summary']['documents_missing'] > 0 or
compliance_report['compliance_summary']['documents_expired'] > 0):
compliance_report['compliance_summary']['overall_status'] = 'NEEDS_REVIEW'
return compliance_report
Step 4: Intelligent Risk Flagging
Use an Agent to identify inconsistencies, unusual provisions, and potential issues across the document package.
Agent Prompt for Risk Detection
System Prompt:
"You are a closing risk analyst identifying potential issues, inconsistencies, and unusual provisions across a loan closing package.
RISK CHECKS TO PERFORM:
**1. Name Consistency:**
Check that borrower legal name is consistent across all documents (credit agreement, UCC filings, board resolution, etc.).
Flag any variations or misspellings.
**2. Date Consistency:**
Verify that document dates are logical:
- Board resolutions pre-date credit agreement execution
- UCC filings are dated on or after credit agreement date
- Insurance certificates are current as of closing
**3. Amount Consistency:**
Confirm that loan amounts match across:
- Credit agreement
- Promissory note
- UCC filings (if secured)
- Board resolution authorizing the loan
**4. Collateral Consistency:**
Verify that collateral descriptions match across:
- Credit agreement
- Security agreement
- UCC financing statements
**5. Party Consistency:**
Confirm that all parties (lender, borrower, guarantors) are correctly named and consistent.
**6. Unusual Provisions:**
Flag any non-standard terms:
- Unusual covenant language
- Non-market interest rates or fees
- Atypical default provisions
- Uncommon prepayment terms
**7. Missing Signatures:**
Check that all signature pages are present and executed.
OUTPUT FORMAT (JSON):
{
"risk_flags": [
{
"risk_type": "name_inconsistency" | "date_inconsistency" | "amount_inconsistency" | "collateral_mismatch" | "unusual_provision" | "missing_signature",
"severity": "critical" | "warning" | "informational",
"description": "...",
"affected_documents": ["...", "..."],
"recommended_action": "..."
}
],
"risk_score": 0-100,
"overall_risk_level": "LOW" | "MEDIUM" | "HIGH"
}
Analyze all documents holistically to identify cross-document issues."
Example Risk Flagging Output
{
"risk_flags": [
{
"risk_type": "name_inconsistency",
"severity": "warning",
"description": "Borrower name listed as 'Acme Manufacturing LLC' in Credit Agreement but 'Acme Manufacturing, LLC' (with comma) in UCC-1 filing",
"affected_documents": ["Credit Agreement", "UCC-1 Financing Statement"],
"recommended_action": "Verify legal entity name and amend UCC-1 if necessary to match exact legal name"
},
{
"risk_type": "date_inconsistency",
"severity": "critical",
"description": "Board Resolution dated 2024-08-15, but Credit Agreement dated 2025-01-15 (Resolution is >90 days old)",
"affected_documents": ["Board Resolution"],
"recommended_action": "Obtain new Board Resolution dated within 90 days of closing"
},
{
"risk_type": "unusual_provision",
"severity": "informational",
"description": "Credit Agreement includes non-standard covenant: 'Borrower shall not hire additional employees without Lender consent'",
"affected_documents": ["Credit Agreement"],
"recommended_action": "Review with legal counsel to confirm intentionality"
}
],
"risk_score": 35,
"overall_risk_level": "MEDIUM"
}
Step 5: Automated Compliance Report Generation
Generate a comprehensive compliance report summarizing the review.
Compliance Report Structure
def generate_compliance_report(package_id, borrower, compliance_validation, risk_flags):
"""
Generate a comprehensive compliance report for the closing team.
"""
report = f"""
CLOSING COMPLIANCE REVIEW REPORT
Generated: {datetime.now().strftime('%Y-%m-%d %H:%M:%S')}
**CLOSING PACKAGE:** {package_id}
**BORROWER:** {borrower}
---
## COMPLIANCE SUMMARY
Overall Status: **{compliance_validation['compliance_summary']['overall_status']}**
- Total Required Documents: {compliance_validation['compliance_summary']['total_required_documents']}
- Documents Present: {compliance_validation['compliance_summary']['documents_present']}
- Documents Missing: {compliance_validation['compliance_summary']['documents_missing']}
- Documents Expired/Expiring: {compliance_validation['compliance_summary']['documents_expired']}
---
## CRITICAL ISSUES (Must be resolved before closing)
"""
# Add missing critical documents
critical_missing = [d for d in compliance_validation['missing_documents'] if d['severity'] == 'critical']
if critical_missing:
for doc in critical_missing:
report += f"\n- **MISSING:** {doc['document_type']}"
# Add expired critical documents
critical_expired = [d for d in compliance_validation['expired_documents'] if d['severity'] == 'critical']
if critical_expired:
for doc in critical_expired:
report += f"\n- **EXPIRED:** {doc['document_type']} - {doc['issue']}"
# Add critical risk flags
critical_risks = [r for r in risk_flags['risk_flags'] if r['severity'] == 'critical']
if critical_risks:
for risk in critical_risks:
report += f"\n- **RISK:** {risk['description']}"
report += f"\n - Action: {risk['recommended_action']}"
if not (critical_missing or critical_expired or critical_risks):
report += "\nNone"
report += """
---
## WARNING ISSUES (Require review but may not block closing)
"""
# Add warning-level issues
warning_missing = [d for d in compliance_validation['missing_documents'] if d['severity'] == 'warning']
warning_expired = [d for d in compliance_validation['expired_documents'] if d['severity'] == 'warning']
warning_risks = [r for r in risk_flags['risk_flags'] if r['severity'] == 'warning']
for doc in warning_missing:
report += f"\n- Missing: {doc['document_type']}"
for doc in warning_expired:
report += f"\n- {doc['document_type']}: {doc['issue']}"
for risk in warning_risks:
report += f"\n- {risk['description']}"
if not (warning_missing or warning_expired or warning_risks):
report += "\nNone"
report += """
---
## INFORMATIONAL ITEMS
"""
info_risks = [r for r in risk_flags['risk_flags'] if r['severity'] == 'informational']
for risk in info_risks:
report += f"\n- {risk['description']}"
if not info_risks:
report += "\nNone"
report += """
---
## COMPLIANT DOCUMENTS
"""
for doc in compliance_validation['compliant_documents']:
report += f"\n- {doc['document_type']}: ✓ Compliant"
report += """
---
## NEXT STEPS
"""
if compliance_validation['compliance_summary']['overall_status'] == 'APPROVED':
report += """
This closing package has been reviewed and meets all compliance requirements.
**CLEARED FOR CLOSING**
The compliance team has approved this package. Funding may proceed.
"""
elif compliance_validation['compliance_summary']['overall_status'] == 'NEEDS_REVIEW':
report += """
This closing package requires manual review for the warning issues listed above.
Please address the flagged items and re-submit for automated review.
"""
else:
report += """
This closing package has CRITICAL ISSUES that must be resolved before closing can proceed.
Please address all critical issues listed above and re-submit the updated documents.
"""
report += """
---
*This report was generated automatically by Klyntos Compliance Review System*
"""
return report
Step 6: Remediation Tracking
Use a Condition Block to route closings based on compliance status and track remediation progress.
Routing Logic
def route_closing_based_on_status(compliance_status, compliance_report):
"""
Route the closing package based on compliance status.
Returns routing decision and next steps.
"""
routing = {
'status': compliance_status,
'route_to': None,
'actions': []
}
if compliance_status == 'APPROVED':
routing['route_to'] = 'CLOSING_TEAM'
routing['actions'] = [
'Send compliance clearance email to closing team',
'Send compliance report to portfolio manager',
'Notify borrower that closing can proceed',
'Archive closing package for audit trail'
]
elif compliance_status == 'NEEDS_REVIEW':
routing['route_to'] = 'COMPLIANCE_OFFICER'
routing['actions'] = [
'Send compliance report to compliance officer for manual review',
'Create task for officer to review warning items',
'Notify closing team of pending review',
'Hold funding pending officer clearance'
]
elif compliance_status == 'CRITICAL_ISSUES':
routing['route_to'] = 'BORROWER_COUNSEL'
routing['actions'] = [
'Send issue report to borrower\'s counsel',
'Request remediation of critical issues',
'Create remediation tracking task',
'Set follow-up reminder for 24 hours',
'Block closing until issues resolved'
]
return routing
Remediation Tracking
When borrowers upload corrected documents:
def track_remediation(original_package_id, updated_documents):
"""
Track remediation of compliance issues.
Re-run compliance review on updated documents.
"""
remediation_log = {
'original_package_id': original_package_id,
'remediation_timestamp': datetime.now().isoformat(),
'updated_documents': [],
'issues_resolved': [],
'issues_remaining': []
}
# Re-classify and re-validate updated documents
# Compare against original compliance report
# Track which issues have been resolved
return remediation_log
Step 7: Automated Delivery & Notifications
Use Response Block + Mail Tool to deliver compliance reports.
Email Template - Compliance Clearance
To: {closing_team_email}
Cc: {portfolio_manager_email}
Subject: ✅ Compliance Clearance - {borrower_name} - Closing {package_id}
The closing package for {borrower_name} has been reviewed and **APPROVED** for closing.
**Closing Package:** {package_id}
**Borrower:** {borrower_name}
**Loan Amount:** ${loan_amount:,.0f}
**Closing Date:** {closing_date}
**Compliance Summary:**
- Total Documents Reviewed: {total_docs}
- All Required Documents: Present ✓
- All Documents Current: Yes ✓
- No Critical Issues: Confirmed ✓
The detailed compliance report is attached.
**CLEARED FOR CLOSING - Funding may proceed.**
---
Automatically generated by Klyntos Compliance Review System
Review completed in {review_time_minutes} minutes
Email Template - Critical Issues
To: {borrower_counsel_email}
Cc: {closing_team_email}
Subject: ⚠️ Closing Package - Critical Issues Require Attention - {borrower_name}
The closing package for {borrower_name} has been reviewed and **CRITICAL ISSUES** have been identified that must be resolved before closing can proceed.
**Closing Package:** {package_id}
**Borrower:** {borrower_name}
**Review Status:** CRITICAL ISSUES
**Issues Requiring Immediate Attention:**
{critical_issues_list}
Please address the above issues and re-submit the corrected documents. The package will be automatically re-reviewed upon submission.
**Next Steps:**
1. Review the attached detailed compliance report
2. Obtain/correct the missing or expired documents
3. Re-upload corrected documents to the closing portal
4. Automated review will run again and provide updated status
For questions, please contact our closing team at {contact_email}.
---
Automatically generated by Klyntos Compliance Review System
Slack Notification Template
def send_slack_notification(channel, package_id, borrower, status, critical_count, warning_count):
"""
Send Slack notification when compliance review completes.
"""
if status == 'APPROVED':
color = '#24A148' # Green
emoji = ':white_check_mark:'
message_text = 'Compliance Approved'
elif status == 'CRITICAL_ISSUES':
color = '#DA1E28' # Red
emoji = ':warning:'
message_text = 'Critical Issues Found'
else:
color = '#F1C21B' # Yellow
emoji = ':eyes:'
message_text = 'Manual Review Required'
slack_message = {
'channel': channel,
'attachments': [
{
'color': color,
'blocks': [
{
'type': 'header',
'text': {
'type': 'plain_text',
'text': f'{emoji} Closing Compliance Review: {borrower}'
}
},
{
'type': 'section',
'fields': [
{'type': 'mrkdwn', 'text': f'*Package ID:*\n{package_id}'},
{'type': 'mrkdwn', 'text': f'*Status:*\n{message_text}'},
{'type': 'mrkdwn', 'text': f'*Critical Issues:*\n{critical_count}'},
{'type': 'mrkdwn', 'text': f'*Warnings:*\n{warning_count}'}
]
}
]
}
]
}
return slack_message
Step 8: Workflow Integration & Audit Trail
Complete Workflow
1. Document Upload (File Tool)
↓
2. Document Classification (Vision Tool + Agent Block)
↓
3. Compliance Policy Matching (Knowledge Base + Agent Block + Function Block)
↓
4. Risk Flagging (Agent Block)
↓
5. Compliance Report Generation (Function Block)
↓
6. Routing Decision (Condition Block)
↓
7a. If APPROVED → Send clearance to closing team (Mail Tool + Slack)
7b. If NEEDS_REVIEW → Route to compliance officer (Mail Tool + Slack)
7c. If CRITICAL_ISSUES → Send to borrower's counsel (Mail Tool + Slack)
↓
8. Track remediation if documents re-submitted (loops back to Step 2)
Audit Trail & Record Keeping
def create_audit_trail(package_id, classification_results, compliance_validation, risk_flags, routing_decision):
"""
Create permanent audit trail for compliance review.
Stores what was reviewed, when, and what decisions were made.
"""
audit_record = {
'package_id': package_id,
'review_timestamp': datetime.now().isoformat(),
'reviewer': 'Klyntos Automated System',
'documents_reviewed': len(classification_results),
'classification_summary': {
doc['classification']['document_type']: doc['classification']['confidence_score']
for doc in classification_results
},
'compliance_status': compliance_validation['compliance_summary']['overall_status'],
'critical_issues_count': len([f for f in risk_flags['risk_flags'] if f['severity'] == 'critical']),
'warning_issues_count': len([f for f in risk_flags['risk_flags'] if f['severity'] == 'warning']),
'routing_decision': routing_decision['route_to'],
'actions_taken': routing_decision['actions'],
'full_compliance_report': compliance_validation,
'full_risk_report': risk_flags
}
# Store in database or document management system
# This provides regulatory audit trail
return audit_record
Testing Your Workflow
Test Case 1: Fully Compliant Closing (Should Auto-Approve)
Input:
- Credit Agreement (executed, dated within 7 days)
- Promissory Note (executed)
- Security Agreement (executed)
- Guaranty Agreement (executed)
- Board Resolution (dated within 60 days)
- Certificate of Good Standing (dated within 20 days)
- UCC-1 filings (3 states, all filed)
- General Liability Insurance (valid for 11 months, lender named as additional insured)
- Property Insurance (valid for 11 months, lender named as loss payee)
- Financial Statements (60 days old)
- Legal Opinion (complete)
Expected Output:
- Overall Status: APPROVED
- Critical Issues: 0
- Warnings: 0
- Route to: CLOSING_TEAM
- Compliance clearance email sent
- Review time: < 5 minutes
Test Case 2: Missing Critical Documents (Should Block Closing)
Input:
- Credit Agreement (executed)
- Promissory Note (executed)
- Board Resolution (executed)
- UCC-1 filings (only 1 state, but borrower operates in 3 states)
- MISSING: Security Agreement
- MISSING: General Liability Insurance Certificate
Expected Output:
- Overall Status: CRITICAL_ISSUES
- Critical Issues: 3 (missing security agreement, missing insurance, incomplete UCC filings)
- Route to: BORROWER_COUNSEL
- Issue report emailed to counsel with specific remediation requests
- Slack alert sent to compliance team
Test Case 3: Expired Documents (Should Flag for Remediation)
Input:
- All required documents present
- Board Resolution dated 95 days ago (policy requires < 90 days)
- General Liability Insurance expires in 15 days (policy requires > 30 days validity)
Expected Output:
- Overall Status: CRITICAL_ISSUES
- Critical Issues: 2 (board resolution too old, insurance expiring too soon)
- Route to: BORROWER_COUNSEL
- Specific requests: "Obtain new Board Resolution dated within 90 days" and "Provide updated insurance certificate with > 30 days validity"
Test Case 4: Inconsistent Information (Should Flag for Review)
Input:
- All required documents present
- Borrower name in Credit Agreement: "Acme Manufacturing LLC"
- Borrower name in UCC-1: "Acme Manufacturing, LLC" (with comma)
- Loan amount in Credit Agreement: $2,500,000
- Loan amount in Promissory Note: $2,500,000
- Loan amount in Board Resolution: $2,000,000 (incorrect)
Expected Output:
- Overall Status: NEEDS_REVIEW
- Warning Issues: 2 (name inconsistency, amount discrepancy)
- Route to: COMPLIANCE_OFFICER
- Recommended Actions: "Verify correct legal entity name" and "Obtain amended Board Resolution with correct loan amount"
Advanced Enhancements
1. AI-Powered Document Extraction
Extract specific terms and provisions automatically:
- Interest rates
- Covenant thresholds
- Maturity dates
- Collateral descriptions
Compare extracted terms against expected terms from the term sheet or credit approval memo.
2. Historical Compliance Analytics
Track compliance patterns over time:
- Which document types are most frequently missing?
- Which borrower counsel firms have the highest compliance rates?
- What are the most common reasons for closing delays?
Use this data to improve borrower education and streamline processes.
3. Real-Time Closing Portal
Build a borrower-facing portal where counsel can:
- Upload documents in real-time
- See compliance status update live
- Receive instant feedback on missing or expired documents
- Track remediation progress
4. Integration with Document Management Systems
Connect Klyntos to your existing DMS (e.g., NetDocuments, iManage) to:
- Auto-import closing documents
- Store compliance reports alongside loan files
- Maintain version control for remediated documents
ROI Metrics
| Metric | Before Klyntos | After Klyntos | Improvement |
|---|---|---|---|
| Time per closing review | 6 hours | 45 minutes | 88% reduction |
| Closings per month (same team) | 50 | 150 | 200% increase |
| Post-closing oversights | 8% of closings | 0% | 100% elimination |
| Compliance staff required (per 100 closings/mo) | 12 FTEs | 7 FTEs | 42% reduction |
| Average closing delay due to compliance | 2.5 days | 0.3 days | 88% faster |
Troubleshooting
Issue: Document classification has low confidence scores Solution: Ensure uploaded documents are clear and legible. Use high-quality PDFs instead of scanned images when possible. Train the Agent with examples of your specific document templates.
Issue: False positives on name inconsistencies Solution: Add name normalization logic to account for common variations (LLC vs L.L.C., Inc. vs Incorporated). Build a name matching function that handles punctuation differences.
Issue: Agent flags non-standard provisions that are actually acceptable Solution: Enhance the Knowledge Base with examples of acceptable non-standard language. Create an "approved variations" library.
Issue: UCC filing jurisdiction detection incorrect Solution: Improve borrower profile data to clearly specify all states of operation. Cross-reference with business registration records.
Next Steps
- Document your closing requirements - Compile your closing checklist and policy requirements
- Build document type templates - Create examples of each document type for classification training
- Test with historical closings - Run past closing packages through the system to validate accuracy
- Configure routing rules - Set up email templates and notification workflows
- Train your team - Show compliance officers and closing teams how to use the automated system
For implementation support, visit the Klyntos documentation or contact our team.