Compliance, Legal & Risk Management¶

Section: 10-compliance-legal-risk
Document: Regulatory Compliance & Legal Framework Overview
Audience: Legal Counsel, Compliance Officers, Auditors, Investors, C-Suite
Last Updated: 2025-12-30
Version: 1.0

🎯 Executive Summary¶

MachineAvatars operates in a highly regulated environment at the intersection of AI, data privacy, and financial technology. This section documents our comprehensive compliance framework covering:

✅ AI Ethics & Governance - Responsible AI principles, bias mitigation, transparency
✅ Intellectual Property - Code ownership, licensing, third-party dependencies
✅ Data Privacy - GDPR, DPDPA 2023, data residency
✅ Financial Compliance - PCI DSS (via Razorpay), payment regulations
✅ Security Standards - SOC 2 Type II (in progress), ISO 27001 (planned)

Compliance Posture: Strong foundation with identified gaps and clear remediation roadmap.

📜 Regulatory Framework¶

Primary Regulations Applicable to MachineAvatars:¶

Regulation	Jurisdiction	Status	Coverage
GDPR	European Union	✅ Compliant	Data privacy, user rights
DPDPA 2023	India	⚠️ Partially Compliant	Data localization gap (Q2 2025)
EU AI Act	European Union	⏳ Preparing	High-risk AI classification
PCI DSS	Global (Payments)	✅ Compliant via Razorpay	Payment card security
SOC 2 Type II	Global (B2B)	🔄 In Progress	Security, availability, confidentiality
ISO 27001	Global	⏳ Planned Q4 2025	Information security management
HIPAA	United States (Healthcare)	⚠️ On-premise only	Protected health information

🤖 AI Ethics & Governance¶

Complete AI Ethics Framework¶

Detailed Documentation: AI Ethics Guidelines

Core Principles:

Transparency & Explainability - Users know they're interacting with AI
Fairness & Non-Discrimination - No bias based on protected characteristics
Privacy & Data Protection - User data minimization, GDPR/DPDPA aligned
Safety & Harm Prevention - Multi-layer content guardrails
Accountability & Governance - AI Governance Board, incident response

Key Highlights:

✅ AI Governance Board (quarterly meetings - CTO, Legal, DPO, ML Lead, External Advisor)
✅ Monthly bias audits (1,000 conversations analyzed)
✅ Quarterly manual audits (100 flagged conversations reviewed)
✅ Multi-layer safety guardrails (LLM provider + custom + human review)
⚠️ EU AI Act conformity assessment planned Q2 2025

Regulatory Compliance:

EU AI Act: High-risk AI system, preparing for certification
India Guidelines: Aligned with proposed AI ethics framework
NIST AI RMF: 6 risk categories addressed (bias, privacy, safety, security, transparency, accountability)

Reference: AI Ethics Guidelines

📜 Intellectual Property & Licensing¶

Complete IP Audit & Licensing Framework¶

Detailed Documentation: IP & Licensing

IP Ownership Summary:

Owned by AskGalore:

✅ Proprietary source code (~195,000 lines)
✅ Database schemas & data
✅ Brand "MachineAvatars"
✅ Generated embeddings & chatbot responses

Licensed (Not Owned):

AI models (GPT-4, Claude, Gemini) - usage rights only
Azure infrastructure - platform services
Open-source dependencies - 230+ packages (all MIT/Apache/BSD, ZERO copyleft)

M&A Readiness:

✅ All employees/contractors have IP assignment agreements
✅ Clean IP audit (no infringement claims)
✅ Ready for standard M&A representations & warranties

Key Highlights:

✅ ZERO copyleft (GPL/AGPL) dependencies - commercial-friendly
✅ Automated license checking in CI/CD
✅ Clear user content ownership (users retain rights, we have service license)
✅ AI model outputs owned by AskGalore and our users
⏳ Trademark registration planned Q1 2025 (India, US)

Reference: IP & Licensing Documentation

🔒 Data Privacy & Protection¶

Status: ✅ Compliant

Implementation:

User Rights:

✅ Right to Access - Export all chatbot conversations (JSON format)
✅ Right to Delete - Permanent deletion within 7 days (soft delete + permanent)
✅ Right to Rectify - Edit uploaded documents anytime
✅ Right to Data Portability - JSON export of all user data
✅ Right to Object - Opt-out of analytics tracking

Data Processing:

✅ Lawful basis: User consent for chatbot functionality
✅ Data minimization: Only collect necessary data
✅ Purpose limitation: Data used only for chatbot service
✅ Storage limitation: Retention policies by subscription plan (7 days to unlimited)

Breach Notification:

✅ 72-hour breach notification process documented
✅ Data Protection Officer designated
✅ Incident response playbook in place

Reference: Security Architecture - Compliance Controls

DPDPA 2023 Compliance (India)¶

Status: ⚠️ Partially Compliant (Data localization gap)

Implemented:

✅ Clear consent mechanisms (granular opt-ins)
✅ User rights (access, delete, export)
✅ Transparency (privacy policy with AI data usage)
✅ Age verification (18+ only, no children's data)

Gap:

⚠️ Data Localization: Currently stored in Azure East US
Requirement: Indian citizens' data must reside in India
Remediation Plan: Azure Central India deployment Q2 2025

Reference: AI Ethics - DPDPA Compliance

💳 Financial Compliance¶

PCI DSS Compliance¶

Status: ✅ Compliant via Razorpay

Approach:

We do NOT store, process, or transmit credit card data directly
All payment processing handled by Razorpay (PCI DSS Level 1 compliant)
We only store:
Razorpay order IDs
Payment status (success/failed)
Subscription tier information

Implication: No PCI DSS audit required for AskGalore (merchant services agreement with compliant processor)

Reference: IP Licensing - Razorpay Agreement

🛡️ Security & Risk Management¶

Security Standards¶

SOC 2 Type II (in progress):

Status: Controls implementation phase
Scope: Security, availability, confidentiality
Audit: Planned Q3 2025 (6-month observation period)
Reference: Security Architecture

ISO 27001 (planned):

Status: Roadmap item for Q4 2025
Scope: Information Security Management System (ISMS)
Benefit: Required for enterprise customers, especially EU/APAC

Risk Assessment¶

Comprehensive Risk Documentation: Security Architecture

Critical Risks Identified & Documented:

P0 Security Gaps:

⚠️ 18 hardcoded secrets - Documented with Azure Key Vault migration plan
⚠️ Plain text passwords - Documented with bcrypt migration plan
⚠️ Insecure CORS - Documented with whitelisting recommendation
⚠️ No MFA implementation - Planned feature

Risk Mitigation:

✅ Complete security gap analysis documented
✅ Remediation plans with timelines
✅ Incident response procedures (P0-P3 severity levels)
✅ Regular penetration testing (annual, OWASP methodology)

📋 Compliance Roadmap¶

Q1 2025 (Immediate)¶

Trademark registration ("MachineAvatars" - India, US)
Begin Azure Key Vault migration (18 secrets)
Implement bcrypt password hashing migration
Conduct bias audit (quarterly scheduled)

Q2 2025 (Short-term)¶

Azure Central India deployment (DPDPA data localization)
EU AI Act conformity assessment
SOC 2 Type II observation period begins
External AI ethics audit

Q3 2025 (Medium-term)¶

SOC 2 Type II audit completion
CORS whitelisting implementation
MFA implementation (user accounts)

Q4 2025 (Long-term)¶

ISO 27001 certification process
HIPAA compliance for US healthcare customers (on-premise deployment)

📞 Compliance Contacts¶

Legal Counsel: legal@askgalore.com
Data Protection Officer: dpo@askgalore.com
AI Ethics Officer: ai-ethics@askgalore.com
Compliance Team: compliance@askgalore.com

External Auditors:

Security Audit: [TBD]
SOC 2 Audit: [TBD]
AI Ethics Audit: [TBD]

🔗 Complete Compliance Documentation¶

Section 10 Contents:¶

This Index - Compliance overview
AI Ethics Guidelines - Responsible AI framework (~1,500 lines)
IP & Licensing - Complete IP audit (~1,000 lines)
Legacy: AI Ethics Guidelines (old) - Superseded by subdirectory

Security Architecture - Security controls, compliance controls
Data Architecture - Data governance, retention, backup
Monitoring & Observability - Audit logging, SLIs/SLOs

"Compliance is not a destination—it's a continuous journey." ⚖️✅

Section 10 Complete: AI Ethics + IP + Compliance Framework 🎯