Compliance & Transparency

Kareg complies with EU regulatory frameworks by design: transparent methodology, no personal data, and clear boundaries on what the signal is and isn't.

EU AI Act classification

EU AI Act (Regulation 2024/1689), Article 52

Limited Risk

Classification rationale

✓Not used for social scoring, biometric identification, or law enforcement (prohibited)
✓Not safety-critical infrastructure (not high-risk per Annex III)
✓Does provide automated assessments that inform financial decisions
✓Falls under transparency obligations (Article 52)

Not a high-risk system

Per Annex III, high-risk AI includes systems for creditworthiness assessment. Kareg does not assess individual creditworthiness — it provides macro-level market regime classification that applies uniformly to all market participants.

Methodology transparency

Every component of the pipeline is documented and auditable.

Component	Method	Transparency
Feature computation	Rolling z-scores (multi-year window)	Fully documented
Classification	Threshold-based state machine	Thresholds published
Severity assessment	Weighted composite score	Weights published
Decision (policy)	Rule-based lookup table	Reproducible via audit

Human oversight

Controls that keep humans in the loop at every step.

Signal review

Each daily signal reviewed before publication

Override capability

Manual override via dispute mechanism

Audit trail

Full provenance: input data → features → classification → decision

Kill switch

Pipeline can be halted at any stage

Data protection

No personal data. No profiling. GDPR not applicable.

✓No personal data is processed — all inputs are aggregated macroeconomic data
✓No profiling — signals apply uniformly, not to individuals
✓GDPR: Not applicable (no personal data processing)

EU Benchmarks Regulation (BMR)

Not a benchmark under BMR Article 3(1)

Why Kareg signals are not benchmarks

→No price-setting function — signals are advisory risk overlays
→No index calculation — the output is a qualitative regime label, not a quantitative index
→No contractual reference — no financial product directly references Kareg for valuation

Data source contingency plan

US macro sources	Redundant government data APIs
EU macro sources	Alternative official statistical providers
Market data providers	Direct exchange feeds as fallback

Benchmark Regulation Notice: Kareg regime signals are advisory risk overlays and do not constitute a benchmark within the meaning of Regulation (EU) 2016/1011. The signals are derived from publicly available macroeconomic data and should not be used as the sole basis for investment decisions or financial instrument valuation.

Record-keeping

Retention policy compliant with Article 12 (ICT security and data integrity).

Published artifacts5 years

Hash verification log5 years

Pipeline run manifests5 years

Configuration historyIndefinite (Git)

Disclaimers (plain English)

•Kareg provides market context and classification, not investment advice.
•Outputs should not be used as the sole basis for investment decisions or valuation.
•Kareg makes no representation that its signals meet the requirements of a regulated benchmark administrator under BMR.