These developments took place against the background of the normalisation of financial conditions. Contributing to this process were the domestic reforms applied and the ECB’s monetary policy measures, together with progress in EMU governance arrangements. In the case of monetary policy, the ECB’s deployment of a raft of non-standard measures favourably impacted financing conditions, reducing financial fragmentation in the euro area and prompting a pick-up in bank lending. In turn, on the back of expectations of a recovery in the US economy, the euro area monetary policy enabled a substantial depreciation of the euro in the first half of 2015, which helped European – and Spanish – exporters to increase their relative weight in international markets. Adding to these factors underpinning the recovery in activity and employment were the marked decline in oil prices and fiscal policy, which joined monetary policy in its expansionary stance, in contrast to its restrictiveness in previous years. Our recovery can hardly continue to be based, to the same extent as in 2015, on these expansionary factors. The mix of stimuli, both from demand-side policies (monetary policy and fiscal policy) and from the fall in oil prices since 2014, is going to have less of an impact on growth. Fiscal policy will have to be restrictive again until the process of fiscal consolidation is complete. And, as to the exchange rate of the euro, the most prudent assumption would be that it will not be a significant additional stimulus but rather approximately neutral, at least during 2016.

The international standards require supervisors to appropriately supervise, monitor and regulate financial institutions for compliance with AML/CFT requirements commensurate with their risks. As such, to effectively implement the above, a country’s AML/CFT supervision has to be embedded in the broader framework of prudential and business conduct supervision. This is to leverage on and optimise the synergies, expertise and resources to ensure effectiveness of both overall supervision of financial institutions and specific AML/CFT supervision. Supervisors are required to ensure effective management of ML/TF risk and compliance with AML/CFT requirements by the financial institutions by assessing institution’s policies, procedures and processes for identifying and managing ML/TF risk and in complying with regulatory requirements. This integration also ensure that supervisors are coherent and apply high standards in fulfilling their responsibilities for both AML/CFT and prudential supervision. As for AML/CFT, supervisors have to include AML/CFT risk in their risk based approach to supervisions and to be fully aware of consequences and implications of theirs supervised institutions’ failures to adequately identify and manage all risks including ML/TF risk. This is because the issue is no longer just about technical compliance but more importantly, whether the supervisory framework has been effective in mitigating and in ensuring adequate enforcement against ML/TF. Therefore, to equip supervisors in fulfilling their duties to conduct AML/CFT supervision, courses such as this is important to provide all of you with an understanding of the importance of reviewing the operational, legal, and reputational risks associated with ML/TF and their impact on the overall bank assessment.