As a result, small C&I loans now constitute a smaller portion of total C&I lending, both in the Second District and nationally (Chart 2). This is likely due, in part, to nominal factors, but could also reflect underlying economic conditions. Turning to community banks, they have historically held a disproportionate amount of small commercial loans, and this is a trend that has continued post-crisis. Among all Second District firms with less than $ billion in total assets, community banking organizations (CBOs) hold 54 percent of total assets, but 66 percent of total small commercial loans. This share has declined somewhat since 2011 (Chart 3). Within small commercial lending, CBOs are especially important when it comes to small commercial real estate (CRE) loans, providing 79 percent of total CRE loans under $ million. 3/6  BIS central bankers' speeches  Given the importance of small businesses to employment and growth in so many communities around our District, we welcome hearing your views on what might be driving these trends. More generally, we are interested in your assessment of business and lending conditions in the communities that you serve. What are the key challenges and opportunities that community banks face? Your insight will provide a key supplement to our quantitative research, and combining these two perspectives will support our efforts to understand what we are seeing in small business lending. Our supervisory teams are interested in your insights when we visit your organizations to conduct examinations and in venues like this conference.

For example, in the non-financial sector, the Accounting and Corporate Regulatory Authority will implement an enhanced regulatory framework for corporate service providers, to minimise the risks of shell companies being set up for illicit purposes. This is expected to take effect from the last quarter of 2014. As another example, pawnbrokers are identified as a potential channel for money laundering. While pawnbrokers are already subject to basic AML/CFT obligations, further requirements will be introduced when changes to our pawnbroking legislation are put in place at the end of this year. 8 For the financial sector, the controls in place are assessed during the NRA exercise to be generally strong, which is not surprising given that the sector has built up considerable AML/CFT expertise and processes over many years. Nonetheless, there are newer areas to be considered. For instance, we have announced in March that we will regulate virtual currency intermediaries for AML/CFT purposes. Our approach is a targeted one, recognising that virtual currency intermediaries can facilitate anonymous cross border money transfers, not unlike the activities of money-changing and remittance businesses. They will thus be subject to similar AML/CFT requirements, and further details will be released in due course. Also, for remittance agents and money-changers themselves, MAS has stepped up supervision, inspection and enforcement efforts, and is also engaging the licensees on their ML/TF risks. 9 Banks are critical gatekeepers against illicit fund flows. This is why MAS must continue to take proactive measures to maintain a robust and effective regime.