# 2021 BSA/AML Model Risk Statement: Interagency Statement on Model Risk Management for Bank Systems Supporting BSA/AML Compliance

Source: https://www.bankingnewsai.com/ai-regulation/documents/fed-bsa-aml-model-risk-statement-2021
Last updated: Aug 26, 2026

On April 9, 2021 the Federal Reserve (as SR 21-8), OCC, FDIC, and NCUA, with FinCEN concurrence, issued a statement on how model risk management principles apply to systems banks use for Bank Secrecy Act / anti-money-laundering compliance, and simultaneously asked for comment on it. It confirmed that SR 11-7 principles are flexible enough for BSA/AML systems, that banks may update or test innovative approaches — including machine learning — without automatically triggering full revalidation, and that the statement created no new requirements. It was superseded by SR 26-2 on April 17, 2026.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [Federal Reserve](https://www.bankingnewsai.com/ai-regulation/federal-reserve) |
| Type | Guidance |
| Status | Superseded |
| Published | Apr 9, 2021 |
| Effective | Apr 9, 2021 |
| Applies to | Banks supervised by the Federal Reserve, OCC, FDIC, and NCUA that use models or automated systems for BSA/AML compliance (transaction monitoring, customer risk rating) |
| Official text | https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210409a.htm |

## Key points

- Clarifies that model risk management guidance (SR 11-7 / OCC 2011-12) is principles-based and applies flexibly to BSA/AML transaction-monitoring and customer-risk-rating systems
- States that not every BSA/AML system is a 'model' — banks decide, using their own risk-based framework, which systems fall within model risk management
- Encourages responsible innovation: testing or piloting innovative approaches such as machine learning need not by itself require full model validation before use
- Confirms that BSA/AML system changes (rule-threshold updates, scenario tuning) can be managed proportionately rather than through full revalidation
- Emphasizes that the statement does not alter existing legal requirements or create new supervisory expectations
- Issued with a companion request for information on how model risk principles support BSA/AML compliance

## What changed for banks

Before this statement, many banks treated any change to AML monitoring — including adopting ML for alert triage — as a full model revalidation event, which slowed adoption. The 2021 statement gave supervisory cover for proportionate, risk-based treatment and for piloting ML in AML. Its substance was folded into the 2026 revised model risk guidance, which rescinded it as a standalone document.

## Use cases it governs

- [AML / KYC](https://www.bankingnewsai.com/ai-regulation/by-use-case#aml-kyc)
- [Model risk management](https://www.bankingnewsai.com/ai-regulation/by-use-case#model-risk)
- [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general)

> Superseded by [SR 26-2](https://www.bankingnewsai.com/ai-regulation/documents/fed-sr-26-2).

Same interagency text issued as: [OCC Bulletin 2021-19](https://www.bankingnewsai.com/ai-regulation/documents/occ-bulletin-2021-19), [FDIC FIL-27-2021](https://www.bankingnewsai.com/ai-regulation/documents/fdic-fil-27-2021), [2021 BSA/AML Model Risk Management Statement](https://www.bankingnewsai.com/ai-regulation/documents/fincen-bsa-aml-model-risk-statement-2021).

## FAQ

### Is the 2021 BSA/AML model risk management statement (SR 21-8) still in effect?

No. SR 21-8 was superseded on April 17, 2026 by SR 26-2, the revised interagency model risk management guidance, which now covers BSA/AML models within its general framework.

### Does using machine learning for AML transaction monitoring require full model validation?

The 2021 statement said piloting or testing innovative approaches such as ML need not automatically trigger full validation, and that banks should apply model risk management proportionately. Under SR 26-2 the same risk-based, materiality-driven approach applies to AML models.

## Related documents

- [SR 26-2](https://www.bankingnewsai.com/ai-regulation/documents/fed-sr-26-2) — Revised Guidance on Model Risk Management (Apr 17, 2026)
- [Cook: Opportunities and Risks of AI (May 2026)](https://www.bankingnewsai.com/ai-regulation/documents/fed-cook-speech-ai-economy-financial-system-2026) — The Opportunities and Risks AI Presents for the Economy and Financial System — Governor Lisa D. Cook (May 27, 2026)
- [Bowman: AI in the Financial System (May 2026)](https://www.bankingnewsai.com/ai-regulation/documents/fed-bowman-speech-ai-financial-system-2026) — Artificial Intelligence in the Financial System — Vice Chair for Supervision Michelle W. Bowman (May 1, 2026)
- [SR 23-4](https://www.bankingnewsai.com/ai-regulation/documents/fed-sr-23-4) — Interagency Guidance on Third-Party Relationships: Risk Management (Jun 7, 2023)
- [2021 Interagency AI RFI](https://www.bankingnewsai.com/ai-regulation/documents/fed-interagency-ai-rfi-2021) — Request for Information and Comment on Financial Institutions' Use of Artificial Intelligence, Including Machine Learning (Mar 31, 2021)
- [SR 11-7](https://www.bankingnewsai.com/ai-regulation/documents/fed-sr-11-7) — Supervisory Guidance on Model Risk Management (Apr 4, 2011)
- [FIN-2026-Alert005 (Digital Asset Investment Scam Centers)](https://www.bankingnewsai.com/ai-regulation/documents/fincen-alert-2026-scam-centers) — FinCEN Alert on Money Laundering Activity Associated with Digital Asset Investment Scam Centers (Sep 3, 2026)
- [FIN-2026-Alert004 (Federal Student Aid Fraud)](https://www.bankingnewsai.com/ai-regulation/documents/fincen-alert-2026-federal-student-aid-fraud) — FinCEN Alert on Fraud Schemes Targeting Federal Student Aid (Jul 24, 2026)

Last reviewed Aug 26, 2026. Cite the official text (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20210409a.htm) for the rule and this page for the summary and dates.

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