From the financial point of view, the weak economic growth puts upward pressure on the budget deficit and public debt, and creates financial difficulties for businesses. These difficulties are reflected in higher non-performing loans in the economy, and negatively affect the banks’ willingness to lend. Such problems have been and continue to be present in the Albanian economy. However, new information signals that 2014 may be a turning point for the economic activity in Albania. The economic growth indices, businesses’ perception and financial markets performance improved faster than our expectations. Such a development, combined with the expected improvement in the world economic outlook, subdued uncertainties, improved business climate at home, implementation of stimulating macroeconomic policies, and acceleration of structural reforms, signals that the Albanian economy may gradually improve in the quarters ahead. The current risks to this scenario will remain present. In the following, I will dwell longer in describing the expected developments and related risks, while trying to highlight the policies that need to be implemented in order to avoid such risks. Annual inflation averaged 1.9% during the first quarter of 2014; this is upward compared to the rate recorded in the previous quarter. The annual rate of inflation was 2.2% in March, returning within the Bank of Albania’s target band. The performance of inflation during the first quarter of 2014 was largely determined by the prices of unprocessed foods. Prices of other items in the basket of goods were generally stable, providing a minimal contribution to annual inflation.

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.