The Importance of AML Model Governance and Validation

Author: Andrew Li, CAMS-Audit

With the technological advancement, the high complexity of the banking industry and the broader application of modeling, financial institutions (FIs) around the world are relying heavily on quantitative analysis models to make predictions within the risk tolerance. These include models on analysis from underwriting credits to the anti-money laundering (AML) program.

This white paper will discuss the rationale on the requirement of a sound model risk management, the key components/requirements of a risk model, as well as key items to watch for during model validation.

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