In March 2010, the Financial Action Task Force (or FATF) issued a report on Money Laundering Vulnerabilities of Free Trade Zones, indicating the rising threats of trade based money laundering. Apart from this report and the periodical typologies reports, the FATF has issued a number of reports relating to specific laundering methods; such as through securities, football and gaming sectors in 2009; vulnerabilities of internet payment system and commercial websites in 2008; and the real estate sector, VAT Carousel Fraud, and the misuse of corporate vehicles, such as trust and company service providers in the previous years. For Malaysia, consistent with the global trend, the financial system continues to be one of the preferred modes of channelling proceeds of crime. In recent years, it is observed that there is a combination of three common methods. The first is the increasing use of repository accounts whereby immediate withdrawals are made once deposits have been received. The other two methods consist of fast movement of money across borders and involvement of third parties in laundering activities. While this is not peculiar to Malaysia, financial institutions are advised to ensure strong controls in place to deter and detect these activities. An example of the modus operandi on the above involves the smuggling of dirty monies into Malaysia by the agents of a criminal ring. The agents will subsequently deposit cash into the accounts of various entities and individuals in the few bank branches operating at the border towns.

Today, we are also taking the opportunity of this very auspicious occasion, with the grace of Allah, to lay the foundations for another initiative, the launch of the International Centre for Education in Islamic Finance, INCEIF. The Islamic banking and financial services industry has experienced profound growth in this recent decade. This growth is expected to accelerate further global expansion in demand for Shariahcompliant financial products and services intensify. To sustain and support the future growth of the industry, an important prerequisite is the development of the talent and expertise that is needed to drive innovation and to raise the performance of the industry to greater heights. The establishment of the International Centre for Education in Islamic Finance (INCEIF) represents an investment in human capital to support the global development of the Islamic financial services industry. Human intellectual capital plays a pivotal role in driving the performance and market competitiveness of the industry. Going forward, it will be the defining factor. The fast pace of innovation in global financial services in general and in the Islamic financial services sector in particular, will demand new expertise and skills. Indeed, there will be an increase in demand for adequately qualified professionals. In this environment, the creation of a substantial pool of talent and expertise is thus indispensable for the future growth of Islamic finance. Strengthening research and development capabilities is also important for enhancing the capacity for innovation to meet the diverse requirements of the rapidly changing global economy.