This initiative allows for the viability of new technologies to be tested in a controlled environment while simultaneously exploring potential risks and the mitigating measures. In addition, Bank Negara Malaysia will continue to foster cooperative platforms between the authorities and financial institutions to enable “rapid responses” to terrorism financing threats. Early this year, we facilitated an information sharing platform between law enforcement agencies and selected financial institutions to swiftly and effectively mitigate risks and respond to threats. Greater access of intelligence information for financial institutions and the increased threats from ISIL had resulted in the upward trend of reporting of Suspicious Transaction Reports (STRs). To 2/3  BIS central bankers' speeches  put it in perspective, in 2015, the financial intelligent unit (FIU) received 93 terrorism financing related STRs which led to 14 disclosures to law enforcement agencies. In comparison, between January and June 2017, we received 346 terrorism financing related STRs which have led to 34 disclosures to law enforcement agencies. Importantly, the quality of STRs submitted has also improved. Bank Negara Malaysia is also in the midst of finalising the details of a new requirement for the Banking and Money Services Business sector to report remittances in high risk areas. The high risk areas will be determined based on the law enforcement agency’s intelligence on areas that they view may pose higher risks for funding of terrorism activities.

The advent of digital currencies as some have forecasted, will mark the beginning of a new era in the financial sector. As authorities, we cannot be oblivious to these developments. As such, Bank Negara Malaysia has initiated the foundational work for the development of a regulatory structure for digital currencies. Beginning 2018, Bank Negara Malaysia will designate persons converting crypto currencies into fiat money currencies as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. This is to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system. Strategic partnership Dynamic collaboration between the public and private sector is imperative to create an environment conducive for the creation of innovative solutions. One of the main findings from the Global FinTech Report published by PWC recently is that legislation is not keeping pace with innovation, creating significant uncertainty. This tells us that a more adaptable structure in policymaking, that minimises bureaucratic hurdles or “red tape”, could be advantageous under the current dynamic environment to encourage potentially important innovations. For that reason, Bank Negara Malaysia launched its very own FinTech Regulatory Sandbox in 2016 to allow experimentation of FinTech solutions in a ‘live’ environment. A number of innovative financial solutions have been allowed to operate under this Sandbox initiative, including an e-KYC solution that could revolutionise the AML/CFT framework in the financial sector in Malaysia.