Did you know examiners have recently been issuing consent orders due to Inadequate Data Governance?
As we started off the year, we took a look back at a few of the BSA/AML consent orders issued by various regulatory agencies in 2024 and noticed that a constant theme appeared—Issues with Data Governance.
Remind me—What is Data Governance?
Data governance for AML systems refers to a set of policies, processes, and controls designed to ensure the accuracy, consistency, and quality of data used in Anti-Money Laundering (AML) systems. By maintaining high data integrity, data governance ultimately supports effective compliance with regulatory requirements and enables better detection of suspicious activity.
But… How important is Data Integrity?
Data integrity influences the effectiveness of customer risk ratings, transaction monitoring, and risk assessments. If your job involves protecting your financial institution from compliance risks, data integrity is where that job starts. If your institution periodically conducts data integrity validations, you are on the right path—it is recommended that you continue to do them regularly. On the flip side, if you have never conducted a data validation on your AML monitoring system, you are almost guaranteed to have data issues and could be setting yourself up for regulatory failure.
Ok, we get it… It’s important! So, how often should we validate our data?
The answer to this question depends largely on the risk appetite of your insurance and the type of validation being performed. However, there are several instances where data validation becomes essential to maintain a properly functioning AML/CFT model.