Policy sludge is the buildup of overlapping, inconsistent, and fragmented rules. This brief outlines how harnessing artificial intelligence (AI) can help reduce such sludge to streamline reporting requirements and unlock resources. Regulations and supervisory frameworks have expanded since the global financial crisis, often without review of existing requirements and how they interact. This has created policy sludge, which adds unnecessary compliance burdens, obscures risks, and drains resources from regulators and regulated institutions. This brief explains how regulators and supervisory agencies can use AI-enabled tools to identify, prioritize, and reduce sludge. Emphasizing the need for human oversight, it recommends creating sludge maps, integrating sludge reviews into policy workflows, and capturing lessons in practical tool kits.