Validating AML Models Under the NYDFS Part 504 AML Requirement

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The New York Department of Financial Services (NYDFS) has adopted Part 504, a first-of-its-kind, risk-based anti-terrorism and anti-money laundering regulation, which requires regulated banks, check cashers and money transmitters to maintain effective programs to monitor transactions for potential Bank Secrecy Act (BSA) and anti-money laundering (AML) violations and filter transactions to prevent sanctions violations.

NYDFS Part 504 became effective on January 1, 2017 and requires the first annual submissions of compliance findings to the NYDFS by April 15, 2018. This article outlines the requirements of Part 504, who it applies to, and things to consider in model variation.

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