How do you validate your financial model performance?

As supervisory guidance (FIL-22-2017) continues to remind us, financial institutions should maintain BSA / AML models that produce productive alerts. However, regulators have been ambiguous about whether it's best practice to use a model validation or a model tuning/optimization process. To find the best solution for your financial institution you'll need to understand how these processes work and the potential benefits of each.

In this whitepaper, you’ll learn about the following components of each model:

  • Core elements
  • Limitations and assumptions
  • Documentation procedures
  • Reporting process
  • Model risk management
  • Data governance and quality of data
  • Final review and analysis

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