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model validation

Comparing Rules Engines vs Machine Learning for AML/CTF

We have been asked to explain the differences between rules-engines and machine learning for anti-money laundering/banking secrecy act applications on numerous occasions. This question typically arises from the compliance team, wanting to better...

Occam's Razor and Managing Model Risk

Introduction

Models Are Essential for Banks, but How Do We Know They’re Right?

Banks are dependent upon models of all kinds. This is because reality is much too complex for us to understand well enough for perfect predictions of the future. Models are used as a simplification of reality.