Banks need to evaluate their models on a regular basis to validate whether they are working as intended; confirm conceptual soundness of models; properly document models; and tune models as needed to deliver more meaningful alerts to BSA analysts.
VIDEO
Model validation for financial institutions
Model validation is an important part of BSA/AML compliance for financial institutions — and an area that regulators are watching.
As models become more complex, validating those models may require a different approach, looking at areas such as data integrity and potential bias in machine learning algorithms.