Daily Compliance Brief — Model Governance Expectations Tighten for AML Monitoring Systems

February 3, 2026

Signal

Recent supervisory communications and public remarks highlighted growing expectations that AML transaction monitoring systems are subject to the same governance, validation, and accountability standards as other material risk models. Authorities pointed to recurring weaknesses in documentation, change management, and independent testing of monitoring logic.

Regulators also emphasised that reliance on vendor-provided models does not diminish institutional responsibility. Firms remain accountable for understanding model assumptions, limitations, and performance, particularly where tuning decisions materially affect alert generation and risk coverage.

Why it matters

For compliance teams, this signals increased scrutiny of transaction monitoring within formal model risk management frameworks. Gaps in validation, governance, or ownership may now translate directly into supervisory findings, even where alert volumes appear stable.

Institutions should reassess the classification of AML monitoring tools, the robustness of periodic model reviews, and the clarity of accountability between compliance, risk, and technology functions. Supervisors are increasingly focused on whether monitoring systems can be evidenced as controlled, explainable, and fit for purpose in relation to the institution’s evolving risk profile.