MAS reviewed the controls of all 19 rate-setting banks in Singapore and took firm supervisory actions against them, including requiring them to place additional reserves with MAS, which imposed a financial cost. We worked closely with the Association of Banks in Singapore (ABS) to strengthen governance and conduct in the process for setting benchmark rates. And more recently in the limelight, the scourge of international money laundering. Combating money laundering and illicit financing is a national effort. In 2014, a multiagency team under the leadership of MAS, the Ministry of Finance, and the Ministry of Home Affairs, published a National Risk Assessment report on the money laundering and terrorist financing risks faced by Singapore in both the financial and non-financial sectors. The report found that, like other major international financial and business centres, Singapore faced a high inherent risk of being used as a conduit for illicit funds. The many agencies worked with their respective sectors to strengthen the framework for anti-money laundering and countering financing of terrorism – AML/CFT for short. The financial sector is particularly vulnerable to money laundering and illicit financing risks. This vulnerability is part of our karma as an international financial centre. Billions of dollars flow every day through hundreds of financial institutions (FIs) in Singapore. And given our prominence and growth as a wealth management centre, that vulnerability is even greater. The ongoing probe into financial transactions related to 1MDB is a stark reminder to us that the risks are real.

In many respects, the United States and Europe face similar challenges and have similar goals. Today I want to focus on some of the challenges. On the regulatory side, there is considerable good news. In particular, substantial progress has been made in strengthening the global banking system. Capital and liquidity standards for internationally active banks have been raised significantly. This should reduce the risk of failure for these banks. Also, the financial system is being made more resilient and robust. For example, the global set of principles for financial market infrastructures has been updated and strengthened. Moreover, some steps have been taken to better deal with the failure of systemically important financial firms on a cross-border basis. Key attributes for resolution regimes have been promulgated by the Financial Stability Board. Efforts are underway to improve how we can work together in a coordinated way on a global basis. But more needs to be done. The impediments to an orderly cross-border resolution still need to be fully identified and dismantled. This is necessary to solve the so-called “too big to fail” problem. Also, cross-border regulatory cooperation needs to be further enhanced. This includes greater exchange of confidential supervisory information so that national regulators can be fully informed about the conditions of the banks that operate within their borders. It also requires efforts to ensure a level playing field across jurisdictions so that the focus is on promoting safety and soundness rather than on trying to protect, favor, or shield national champions.