Validating system model
The specifics may vary but coverage of each goal is required regardless of the size or other attributes of the financial institution.Key Stakeholders A successful AML system validation requires the support and commitment from several key stakeholders.Further, AML systems are often complex and their processing non-transparent.This presents unique challenges to their validation.In fact, there is a wide range of results that may be achieved.
A firm’s reputation can be significantly damaged, penalty and remediation costs may far exceed the actual loss, and in the worst scenario, the firm’s ability to continue to operate can be threatened.
They are often highly complex and their methods of achieving a result are not always revealed by the company that developed the software.
Together with inherent system complexity is a processing context that is constantly in flux.
The key aspect of an AML System is its ability to detect money laundering and other sanctioned/criminal activity and thereby protect the firm from loss.
It must do so as the perpetrators of financial crimes continually evolve their methods of exploitation leading to increased success rates over time.
However, AML technology has been broadly available for only the past 10 years.