First of all, because of the minor role of the banks under resolution in the total banking sector. The 28 banks that became subject to resolution accounted for a mere 4 per cent of the banking sector’s liabilities. And we do not expect their importance to become any stronger. Further, as I have noted, resolution should result in the sale of banks in the market; therefore, we expect there to be no significant impact from the new approach on the correlation of public to private participation in bank capital. Further on, on conflict of interests, that is, the risk that the quality of supervision over banks reorganised by the Bank of Russia-controlled institution may deteriorate. With a view to avoiding this risk, we intent to construct a ‘Chinese wall’ to separate Bank of Russia supervision activities from the Fund’s management company. We would draw on our experience with such ‘Chinese walls’, for example, the one between monetary policy and supervision – a fully working arrangement. But, most importantly, the banks under resolution in the new model – once their capital is restored – would be obliged to comply with all regulations, and they should expect no easier ride. In such a way, we would get unprivileged supervision, that is, the one that grants no special status-related discounts to banks under resolution. Let me now pass on to regulation, where we plan to implement a number of meaningful initiatives. As you know, our efforts to implement Basel standards are ongoing.

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.