Enhanced tax transparency lifts the veil on structures created for illicit purposes, and will help to deter tax criminals from abusing trust structures. This bodes well for the longer term sustained growth of the trust industry. The critical role of industry 24. An AML/CFT regime, no matter how robust, cannot in itself fight against ML/TF activities. We need the commitment and active participation of the industry. Promoting a strong AML/CFT culture within the industry, and deepening manpower capabilities are important elements to maintain a robust regime, and allow us to reap the benefits of business growth while managing risks effectively. 25. Industry has primary responsibility to build a good AML/CFT culture and ensure compliance. I am encouraged that the industry has taken active steps to promote robust controls to strengthen its resilience and prepare for increased transparency on beneficial ownership information and enhanced tax transparency. The private banking industry in Singapore introduced a set of industry sound practices last year to provide guidance to private banks on the development and implementation of robust controls to detect and deter the proceeds of tax crimes. As most of you would know, the Singapore Trustees Association has also issued similar guidelines for trust companies. We commend such industry initiatives and look forward to continue working in meaningful partnership with the industry. 26. Competency building is also imperative in raising AML/CFT standards amongst industry professionals. An effective AML/CFT system cannot be solely the responsibility of compliance professionals or experts, but must be an integral part of the firm’s culture.

In asset management, an industry report 7 estimates the number of high net worth individuals and their financial wealth in Asia combined to be about the same as those of Europe and America, but growing faster. The number of Asian middle class has also surged with economic growth. While growth momentum may moderate in the next few years as the global economy recovers, the underlying trend remains. The growing interest in Islamic funds will provide opportunities for asset managers who can provide the right products. In short, my second reflection is that nature of financial services in the coming years will change, with a focus on deepening the symbiotic relationship between financial services and economic growth. This will be favourable for various segments of Islamic finance. Nature of financial regulation Let me move on to my third reflection, on the nature of financial regulation. This crisis shows that proper regulation of financial activities is difficult – it’s unpopular to take away the punch bowl when the party is going. But it is necessary. Equally important is the need to focus on the economic substance and underlying risks of the activities, regardless of its form. Prof. Rifaat provided a very timely reminder when he said recently, “Every financial institution requires close supervision, regardless of whether it is conventional or Islamic.” While Islamic Finance has features that make it robust, there are also risks such as liquidity and concentration risks that demand special attention.