Final answer:
Azure Policy is the tool used to ensure Azure complies with regional regulations and creates compliance reports, enforcing rules and standards over resources for compliance with corporate and regulatory standards.
Step-by-step explanation:
The tool that can be used to ensure that Azure complies with the rules and regulations of a region for hosted resources and to create compliance reports is Azure Policy. Azure Policy enables you to create, assign, and, manage policies that enforce different rules and effects over your resources, so they stay compliant with your corporate standards and service level agreements. Azure Policy does this by evaluating your resources for non-compliance with assigned policies. For example, you can have a policy to ensure all data storage accounts are equipped with advanced threat protection.
Azure Policy can be integrated with Azure Security Center to provide a central place where you can monitor and work on the compliance of your resources. This helps in generating compliance reports which are used to audit and ensure that your resources are in line with regulatory requirements specific to your industry and region.