Validating AML/Sanctions Models: A Case Study

Chandrakant Maheshwari

This white paper provides the validator with approaches he can use to gain an in-depth understanding of banks’ customer demographics, product profiles, and customer behavior with respect to the products they use. We discuss using data analytics, what steps the validator can take to ensure that the existing rules and assumptions of the model are adequately capturing the risks described in the bank’s risk assessment document.

Using the approaches discussed in this paper, the validator can model and review customer behavior and investigate whether the existing AML models are adequate in capturing any suspicious patterns. Based on the respective bank’s demographics and product offerings, the suggested approaches can be easily enhanced or modified.

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