AI on Sensitive Documents: Compliance & Safe Usage Guide

The compliance gap

Organizations want to use AI on their documents. The efficiency gains are real. But most cannot do it safely.

Whether it is client files, tax documents, HR records, or public records, the risk is the same. Pasting sensitive information into public AI tools creates exposure that organizations cannot absorb.

Most AI breaches do not happen because of the AI systems. They happen because sensitive documents are sent to AI before they are prepared or governed.

The shadow AI problem

Many organizations have tried to manage risk by banning or restricting AI. In practice, this is what happens:

• 27 percent of organizations have banned AI use.
• 48 percent of employees admit entering non public company information into AI tools anyway.
• 44 percent report misusing AI at least once.

Teams turn to AI because manual workflows are overwhelming. Without a safe alternative, they operate outside policy frameworks. Bans do not prevent AI use. Bans prevent visibility.

Regulators expect proof of responsible use

Regulators are no longer saying “do not use AI.” They are saying something different:

Use AI in a responsible way, and prove that you used it in a responsible way.

Key compliance requirements

ABA Formal Opinion 512 (July 2024). AI use by lawyers must satisfy confidentiality, competence, verification, and supervision requirements under the professional rules of conduct.

IRS Section 7216. Strict limits on sending taxpayer information to third party systems without explicit informed consent, with criminal penalties for violations.

FOIA and public records laws. AI prompts and outputs can be classified as public records that may be subject to disclosure.

NIST AI Risk Management Framework. An emerging standard for AI governance, logging, and risk controls across industries.

ISO IEC 42001. An international standard for AI management systems that requires documented controls and accountability.

The requirement is consistent across sectors: AI use must be auditable, governed, and privacy first.

Why traditional approaches fall short

Current tools and habits do not fully address the problem.

Redaction software. Redaction removes information, but it is irreversible and often brittle. Once text is removed, it is hard to connect AI output back to the original context without manual work.

Data masking. Masking works well for structured datasets. It does not handle narrative documents with mixed content and unstructured language.

Document management systems. DMS platforms improve storage, access control, and retention. They are not designed to prepare documents for AI analysis.

The “paste into ChatGPT with a disclaimer” approach. This introduces maximum exposure with no traceability, no policy enforcement, and no evidence of responsible use.

Your AI strategy is only as safe as the documents you feed into it. Preparation is the difference between compliance and exposure.

What organizations actually need

A complete solution for using AI on sensitive documents requires four core capabilities.

Safe document preparation

Sensitive information should be identified and removed or transformed before documents leave a secure environment. This must happen by default, not as an optional extra step.

Reversible processing

AI analysis is useful only if it can be mapped back to the original material. Organizations need a way to link AI insights to real documents without exposing protected data in the AI system itself.

Compliance documentation

Every AI interaction with sensitive material should generate evidence. This includes logs that satisfy ABA 512, IRS 7216, FOIA requirements, internal policies, and third party audits.

Tool flexibility

The preparation layer should be independent of any specific AI provider. Once documents are safely prepared, teams should be able to use ChatGPT, Claude, Gemini, or internal models without vendor lock in.

These requirements form the basis of AI safe document workflows.

How KOR Clean™ solves this

KOR Clean™ removes private and identifying information from documents locally, on the user’s device or within the organization’s own environment. Raw client data never leaves that environment.

The system is designed for privacy sensitive teams, including:

• Law firms preparing discovery documents, research, and internal memoranda
• Accounting practices using AI on tax workpapers, audit files, and client correspondence
• HR and people operations teams analyzing performance reviews and employee documentation
• Municipal agencies processing FOIA requests and other public records
• Any organization that handles confidential documents and needs AI capability without exposure risk

KOR Clean™ gives staff AI efficiency while providing the governance and documentation required for compliance. Sensitive information stays protected. AI tools only see prepared, controlled versions of the content.

Implementation requirements

Organizations that want AI safe document workflows should address five areas.

1. Policy framework. Define which types of documents can be processed, which cannot, and what level of preparation is required for each.
2. Technical controls. Implement local processing and other safeguards to prevent data leakage to external systems.
3. Audit capability. Log AI interactions so that usage can be reviewed, explained, and defended.
4. Training. Ensure teams understand what safe usage looks like and what to avoid.
5. Verification. Validate that sensitive information is handled correctly before, during, and after AI analysis.

Organizations do not fail at AI because of the technology. They fail because they lack a governed, auditable workflow around sensitive documents.

Regulatory alignment

For legal professionals (ABA 512)

KOR Clean™ supports:

• Confidentiality obligations under Model Rule 1.6
• Competence requirements under Model Rule 1.1
• Supervision duties when staff or vendors rely on AI tools
• Independent verification of AI outputs before client use

For tax professionals (IRS 7216)

The local processing model ensures that:

• Taxpayer information stays on authorized systems
• No unauthorized third party disclosure occurs
• Audit trails exist for consent and usage
• Criminal exposure under Section 7216 is reduced

For government agencies (FOIA and public records)

KOR Clean™ supports:

• Protection of PII and other sensitive information before AI processing
• Clear documentation of which records were processed and how
• Citizen privacy safeguards and transparent AI usage
• Logging that supports responses to public records requests

Next steps for your organization

If your organization handles sensitive documents and needs to adopt AI safely, a clear path forward looks like this:

1. Assess current usage. Identify where shadow AI is already happening and what types of documents are involved
2. Define requirements. Decide which document types need protection and which regulations apply
3. Implement controls. Put technical and policy controls in place that enable safe processing rather than simple bans
4. Document compliance. Create audit trails and internal documentation that show how AI is used and how risk is controlled
5. Train teams. Align staff on safe usage protocols and what to avoid

Get started with KOR Clean™

KOR Clean™ is built to make this path practical. It enables AI adoption while maintaining compliance with ABA 512, IRS 7216, FOIA requirements, and emerging AI governance standards.

Use AI where it creates value. Protect the documents that should never be exposed. KOR Clean™ makes those two goals compatible.

About Alethekor

Alethekor builds governed infrastructure for AI safe document workflows. KOR Clean™ is the first product, designed to help professional services and public sector organizations use AI on sensitive documents without exposure risk.

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