By working together, we can ensure not only the smooth adoption of international standards, but also that our financial system will not be burdened by unnecessary rules and unintended consequences. 2  BIS central bankers’ speeches  The third direction is the emerging role of macroprudential regulation. The global financial crisis has shown that traditional or microprudential regulation which focuses on the safety and soundness of individual financial institutions fell short of crisis prevention. While financial institutions may be individually safe, collectively they may be at risk due to herd behaviors and their interconnections. There is thus the need to look after the safety and soundness of the financial system in the aggregate, which is why the word “macro” in macroprudential. In essence, macroprudential regulation reduces systemic risks by building up resilience of the financial system during periods of credit boom and rising leverage as well as limiting spillovers from interconnections of financial institutions. It is indeed easy to see that several aspects of Basel III are macroprudential in spirit such as the countercyclical capital buffer and the requirement of large global banks to hold more capital. It is noteworthy that even before the global financial crisis, central banks in the Asia Pacific have routinely used macroprudential tools such as the loan-to-value or LTV ratio and minimum income requirement for credit card borrowers. We just did not call them macroprudential. In some way, it took the West their own crisis to realize the importance of restraining the buildup of systemic risks early on.

This will also act as a deterrent as it signals the commitment and extent to which the relevant authorities and the industry will go to stamp out crime. Hence, we are looking forward to expand this partnership for different types of crimes. Organisations such as the Compliance Officers Networking Group of Malaysia (CONG) and the industry associations can also play a role in enhancing the professionalism and capacity building of compliance officers in Malaysia. The development of human capital is essential in our efforts to combat financial crime. It is our biggest asset, more than any technology. For Bank Negara Malaysia, we will also play our role by ensuring that the regulatory and supervisory framework will provide the necessary environment to prevent, detect and prosecute financial crimes. For us, fighting financial crime is not just about increasing the compliance cost of banks through greater reporting requirements. Instead, we are committed to ensure that the financial sector is well-equipped to support our law enforcement agencies in order to avert these threats. Since the beginning of this year, we have published Red Flag and Typologies reports on several type of crimes including terrorism and proliferation financing, corruption and fraud. These reports aims to provide insights and create awareness, amongst the reporting institutions, of the trends, methods, and techniques used in these crimes. Enhanced understanding of such risks would assist reporting institutions in identification and early detection in order to assist law enforcement agencies to combat such crimes.