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Anti-Money Laundering Model Validation
Creating agile programs to detect and report suspicious activity
Guarding against money laundering is a constant challenge for ﬁnancial institutions, with emerging risks and increasing regulatory scrutiny pressuring key operations. Anti-money laundering (AML) regulations are ever-changing, and programs must be agile to remain compliant and effectively detect and report suspicious activity.
RSM's model validation program is designed to determine if an institution’s AML and Office of Foreign Assets Control (OFAC) screening models are performing as expected and are in alignment with the design objectives and intended business uses. The validation program assesses the major components of the institution's AML monitoring and OFAC screening systems, including inputs, processing and reporting.
Additionally, the framework of our program incorporates the evaluation of the core elements of each model, including:
- Conceptual soundness
- Ongoing monitoring processes
- Outcome analysis
- Management oversight
- Model policy and procedures
- Control activities
The scope and framework for our AML and OFAC model validation testing was established using interagency guidance on model risk management and provides an assessment of the reliability of AML monitoring and OFAC screening models based on their underlying assumptions, theories and methods.