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AML Model Validation: A Critical Need in the New Regulatory Environment

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This training program will discuss the history and origin of a model validation. It will also discuss the requirements by the OCC for a model validation, and what exactly a model validation should include. The session will also analyze the elements of a model validation to know what to look for in an RFP, and detail the requirements included in Final Rule 504.

Event Type:
Webinar
Date:
Jan. 30, 2020
Venue:
11:00 AM PST | 02:00 PM EST
Location:
Online

According to the Office of the Comptroller of the Currency (OCC), “banking organizations should conduct a periodic review-at least annually but more frequently if warranted-of each model to determine it is working as intended and if the existing activities are sufficient.” This has become known in the industry as a model validation, system validation, independent verification and validation (IVV), or just validation. The challenge we’ve seen is interpreting this – what is a model, which models, what a “review” should include, etc.

As such we’ve seen a number of organizations conduct one, either internally or independently, often missing elements to the model that couldn’t possibly validate an institution’s model without them. Further, pushing regulators to require that institutions repeat their model validation.

This webinar will cover a number of topics: the history of a validation – where it comes from, what it means according to the OCC, what elements should a model validation include, the importance of conducting one, how often one should be conducted, what to look for in an RFP, vendor due diligence and the requirements included in Final Rule 504.

  • Learn the history and origin of a model validation.
  • Discuss the requirements by the OCC for a model validation, and what exactly a model validation should include.
  • Where we’re seeing the regulatory pressure to complete a model validation.
  • What a sample project plan should look like.
  • Cover the elements of a model validation in-depth, so you know what you to look for in an RFP.
  • Discuss the importance of statistical data analysis and its importance in the final report.
  • Discuss vendor due diligence – how to select a vendor familiar with the in-depth nature of the project, and being able to recognize their independence.
  • Review the model validation requirements in Final Rule 504.

  • The definition of a model validation according to the OCC
  • How often a model validation should be completed according to the OCC
  • The origin of the term independent verification and validation, and how that relates to today’s model validation
  • Where the regulatory pressure has been to conduct an AML model validation
  • What elements should be reviewed during an AML model validation
  • What qualifies as a model validation, and what does not
  • What a sample model validation project plan would look like
  • Vendor due diligence – selecting a vendor for your AML/BSA projects
  • Definition of vendor independence
  • Outline the additions in Final Rule 504 as they relate to AML model validations

  • BSA/AML Officers
  • Compliance Officers
  • Sanctions Officers
  • AML Analysts
  • Risk Officers
  • Legal Departments
  • Risk Managers
  • CEOs/Presidents at Banks, Broker-Dealers, Money Services Businesses and Other Non-Bank Financial Institutions

Dr. Frank Masi, Ph.D, has over 25 years of business and technical experience and holds a doctorate in business and organizational management from Capella University. For more than 10 years, Dr. Masi has worked in the BSA, AML, and OFAC regulatory environment and has consulted in the in the financial industry providing institutions with enterprise level regulatory software solutions and consulting services in BSA, AML, KYC, the PATRIOT Act, and OFAC.

Dr. Masi is currently teaching corporate risk management and audit and compliance governance at a regionally accredited university, and compliance monitoring as part of the CCRP (Certified Compliance and Regulatory Professional) certification at Pace University. He has presented at more than 20 national conferences associated to AML and OFAC regulatory requirements. He has authored or co-authored numerous articles in the AML/OFAC industry.

During his tenure with FIS, he has worked in the roles of director of professional services managing implementation and consulting services, providing regulatory consulting and software services to the financial industry. In his previous position as product manager for FIS Risk, Fraud, and Compliance Solutions, he managed the AML and OFAC (Prime Compliance Suite) suite of products, Prime IQ, FIS OFAC Watch Products, Watchlist Reporter, Watchlist IQ, eGifts Web EDD, and Prime Data Bank Services.

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