Following completion of testing and tuning of the parameters and thresholds of the transaction monitoring model which final step should the team recommend as necessary to verify effective model functioning?

Following completion of testing and tuning of the parameters and thresholds of the transaction monitoring model which final step should the team recommend as necessary to verify effective model functioning?
A . Model validation
B . Audit continuous monitoring
C . Data validation
D . Regulatory approvals

Answer: A

Explanation:

Purpose of Model Validation:

Model validation ensures that the transaction monitoring model is functioning as intended, effectively identifying suspicious transactions and mitigating AML/CFT risks.

It encompasses testing data accuracy, parameter relevance, threshold efficacy, and compliance with

regulatory requirements.

Process:

Validation includes end-to-end reviews, statistical evaluations, and expert assessments of model outputs.

According to FATF and Basel Committee standards, model validation is a critical component of the AML framework.

Irrelevance of Other Options:

Audit continuous monitoring focuses on ongoing oversight, not the specific confirmation of initial model functionality.

Data validation addresses data quality but does not verify operational model performance.

Regulatory approvals are necessary for compliance but are not a step in verifying model functioning.