Apart from standing guided by specific instruction and detailed direction from regulators, compliance officers are encouraged to introduced new or proactive measures, within the ambit of the law. Similarly, the requirement now emphasises on measures that commensurate with risk. The application of the risk-based approach (RBA) should have a meaningful application in action. Misinformed RBA could lead to unjust financial exclusion, economic cost to institutions, or 3/4  BIS central bankers' speeches  sanctions by the authority. The efforts by private sector are vital as they form a part of the country’s assessment towards compliance to international AML/CFT standards. They are assessed under Immediate Outcome 4 on whether RIs adequately apply AML/CFT preventive measures commensurate with their risks, and report suspicious transactions. I wish to highlight that, based on Mutual Evaluation Exercise conducted on 38 countries so far, majority of the private sector within these countries, including developed countries are still unable to demonstrate the characteristics of an effective system; namely understanding risks, comprehensive internal control and compliance programme including application of customer due diligence on suspicious transactions reporting. I would like to echo the discussion during the Plenary session yesterday that an effective antifinancial crime programme requires concerted efforts from every line in the institutions, be it the first, second or third line of defence. It also demands collaborative efforts by other functions within the institutions, including an updated IT system and infrastructure, comprehensive and continuous staff training programmes, and good understanding of risks.

Credit derivatives have contributed to dramatic changes in the process of credit intermediation, and the benefits of these changes seem compelling. They have made possible substantial improvements in the way credit risk is managed and facilitated a broad distribution of risk outside the banking system. By spreading risk more widely, by making it easier to purchase and sell protection against credit risk and to actively trade credit risk, and by facilitating the participation of a large and very diverse pool of non-bank financial institutions in the business of credit, these changes probably improve the overall efficiency and resiliency of financial markets. With the advent of credit derivatives, concentrations of credit risk are made easier to mitigate, and diversification made easier to achieve. Credit losses, whether from specific, individual defaults or the more widespread distress that accompanies economic recessions, will be diffused more broadly across institutions with different risk appetite and tolerance, and across geographic borders. Our experience since the introduction of these new instruments - a period that includes a major asset price shock and a global recession - seems to justify the essentially positive judgment we have about the likely benefits of ongoing growth in these markets. Despite the benefits to financial resilience, the changes in the credit markets that are the subject of your conference have also provoked some concerns and unease, even among those on the frontier of innovation and the most active participants in these markets.