CDD & SAM Model Validation (DFS 504)

Project Overview

An FBO for a large international European bank in the NYC area requested assistance with performing a Model Validation in line with DFS 504 regulations of their Actimize Customer Due Diligence (CDD) and Actimize Suspicious Activity Monitoring (SAM) modules.

Project Solution

  • The Model Validation team worked closely with the Chief Compliance Officer of the to perform a Model Validation for the Bank’s Transaction Monitoring (TM)and CDD compliance programs and identified several observations across governance and oversight methodologies/procedures. These observations resulted in action items for the revision of their policies and internal controls.
  • Based on the findings, the Model Validation team also identified opportunities for model enhancements. By leveraging production transaction information as well as actual high-risk product usage, the bank can improve its customer risk approach through customization.
  • The team also assessed the current state of the TM and CDD compliance programs by looking at current review processes and evaluating whether the current rules cover all typologies based on the bank’s risk profile.
  • Matrix-IFS helped the bank to enhance its customer risk scoring through activity profiling that identified additional factors that were further aligned with the bank’s risk assessment for high-risk products/ lines of businesses.
  • Finally, the Model Validation team replicated all active, customized rules and identified implementation gaps, which resulted in conclusions for design logic revisions for some of the customized rules.

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