Matrix AML is a framework and a tool set for creating realistic, synthetic risk model data sets for tuning, testing and validation of transactions monitoring systems (TMS) – BSA/AML/CFT, sanctions screening, financial crime, fraud, suspicious activity and others

Matrix AML Risk Model validation for better decisions

Transaction monitoring systems require extensive manual analysis and investigative efforts, while leaving validation in statistical ambiguity. Matrix AML platform is taking out the guessing game.

What is AML Risk Model Validation?

 

  • Financial institutions  rely heavily on risk modeling in most aspects of financial decision making

  • Models are simplified representations of real-world relationships among observed characteristics, values, and events

  • Most of the regulatory enforcement actions are related to AML models and the ineffective validation

  • Today most FI’s struggle to bring their AML models up to the expectations of the regulators

  • AML Risk Model Validation components:

    • Model Design – validate the logic and design of the model

    • System Validation - validate the system to ensure that it is properly designed and performs as designed, including suspicious activity monitoring systems

    • Data Validation - validate that accurate and complete information is captured by a system to execute an AML model

    • Process Validation - ensures adequate design and ongoing sustainability of the processes and administration of the AML system and model

 

Transactions monitoring validation process overview 

 

  • Majority of the transactions risk detection systems optimization methodology is based on pattern matching process that involves several tuning cycles

  • Majority of TMS generated alerts are false positives, but still require extensive manual analysis and investigative efforts, while leaving validation in statistical ambiguity

  • False positive alerts investigation are the major cost factor in TMS deployment and operation

  • In some estimates alert investigation cost can run in a range  $100-$500+ per alert

  • Regulators don’t permit arbitrary alert suppression and financial institutions are facing significant and non-productive budgetary impacts

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