On December 3rd, The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN), the National Credit Union Administration and the Office of the Comptroller of the Currency issued a joint statement encouraging new approaches to fight money laundering and terrorism financing.

New approaches, however, may increase regulatory risk depending on how "outside of the box" they are viewed during examinations. A key to developing and implementing defensible new initiatives is a documented approach to clear concepts, expected outcomes and a strong testing and validation process.

Testing and validation of AML controls may be executed through a variety of techniques. Considerations should include:


Description Accuracy

Business Justification

Regulatory Context  

Performance Expectations

Performance Outcomes

Performance Metrics 

Data Inputs 

Data Outputs

Data Quality 

Data Flow

Data Storage 

Data Analysis

Monitoring Standards 

Production Results

Above/Below The Line Testing 

Process

Results 

Parameter Settings Changes

Overlap of Other Models/Tools/Programs

Impacts on Executive Management Decisions

Expert Judgement 

Contingency Planning

Shelf Life 

Up-to-Date Documentation of Policies & Procedures

Accessibility of Program Information

Incorporating Program Information Into Training