##ity and return. important in this regard are the concentration on liquid investments, in other words readily marketable investments, and on the greatest possible risk diversification by holding different currencies and investment categories. the national bank ’ s leeway for investment has extended considerably since the entry into force of the new national bank act in may 2004. risk diversification options in particular were also increased as a result. the concrete investment structure of the different portfolios and their yields are published quarterly in an updated appendix to the investment policy guidelines of the swiss national bank. the current investment structure and the risk / earnings profile of the national bank ’ s assets, in particular the foreign currency reserves and free assets, can be summarised as follows : the portfolio adjustments made under the new act aim to increase diversification in terms of currency and investment category. within the context of the 2004 strategy, the dollar share was reduced in favour of the pound sterling and the yen. the weakening of the us currency resulted in a further decrease in the dollar ’ s share of foreign currency reserves. recently, in an effort to prevent the dollar ’ s share from dropping too low and with a view to rebalancing, we bought dollars again on a number of occasions. furthermore, as part of the 2004 strategy, the proportion of government bonds was also reduced in favour of other borrowers ’ bonds. the required minimum rating for bond investments was lowered from a2 to bbb, thus covering the entire “ investment grade ” range. corporate bonds have now also been added to the national bank ’ s investment universe, albeit only those of foreign companies. currently, roughly 4 % of both foreign currency reserves and free assets are invested in corporate bonds. the credit quality of all our investments is still very high. borrowers with the top rating aaa account for over 70 % of the investments. close to 20 % bear the aa rating. the remaining investments have an a or a bbb. the average residual maturity ( duration ) of all bonds held by the national bank was kept at 4 - 5 years. the first investments in equities issued exclusively by foreign companies will be made at the beginning of 2005. the addition of equities and corporate bonds is likely to improve the degree of diversification of the investments and will contribute to the achievement of slightly higher returns in the medium term. the main difference between the investment structures of foreign currency reserves and free assets is their currency profile. in the case of free assets, foreign currency investments are

effectively curb and combat these activities. the measures adopted by macao in aml can be traced back to 1991 in which decree - law no. 5 / 91 / m was promulgated to enable the government to confiscate assets derived from drug trafficking. the 1995 penal code unequivocally stipulates that all assets or gains through criminal activities shall be confiscated. the law on organized crime, decree - law no. 6 / 97 / m in 1997, goes further to deal with crimes relating to conversion, transfer or dissimulation of illicit assets or gains arising from criminal activities. decree - law no. 24 / 98 / m promulgated in 1998 implements mandatory reporting of suspicious activities, the entities under the supervision of amcm are especially obliged to do so. in 2002, law no. 4 / 2002 was passed to implement measures under international conventions signed and ratified by the central government and applicable to the msar. specifically, it enables the anti - terrorist measures under resolution no. 1373 of the united nations security council to be applied to macao. in april, 2006, the sar government promulgated law no. 2 / 2006 on “ prevention and repression of money laundering related crimes ” and law no. 3 / 2006 on “ prevention and repression of terrorism related crimes ”. these two legislations clearly define activities relating to money laundering and terrorism. they also provide that all persons including legal entities bear criminal liability to activities relating to money laundering and terrorism, heavier penalty shall apply, reporting entities shall be protected and reporting entities are forbidden to divulge reporting information to third parties. in may and august of the same year, the sar government promulgated administrative regulation no. 7 / 2006 and executive order of the chief executive no. 227 / 2006 which require all financial institutions, casinos, off - shore companies, auditors, accountants, tax consultants, notaries, pawn shops, real estate agents and entities selling articles of high value to report suspicious activities to the newly set up financial intelligence office which will collect and analyze such information. as far as financial system is concerned, amcm has been putting its utmost efforts in promoting the implementation of aml / cft measures by financial institutions. the “ financial system act ” promulgated in 1993 requires, based on the standards set by the basel committee, all credit institutions to identify their customers and keep records of transactions in addition to scrutinizing the properness and qualification of the shareholders and senior management.