would like to underline is the sheer size of the numbers involved. nobody knows the aggregate total of money laundering, but several conservative estimates suggest we are talking about at least 2 % of gdp. this equates to roughly 400 billion euros in europe. and almost 2 trillion euros worldwide. money laundering and the underlying criminal activities therefore pose a genuine threat to the integrity of the financial system. given the size and the complexity of the problem, and the enormous impact it has on our societies, i am afraid there is no quick fix. if we want to succeed in tackling this problem we need to take an integral approach based on four pillars. and i want to describe each of these pillars now. firstly, we need rigorous compliance with existing regulations. financial institutions need to devote sufficient time, rigor and resources to comply with these regulations. more importantly, they need to promote the right culture within their organisations. let ’ s be reasonable : even without explicit regulation, banks understand that knowing your customers is part of their core business. it is key for adequate risk management, and for designing and maintaining a sustainable business case. the second pillar relates to the first. there is room for financial institutions to comply with the existing regulations in smarter and more sophisticated ways. clever algorithms and artificial intelligence can sort through the enormous amount of ‘ alerts ’, and select only the most suspicious ones for further investigation. public - private cooperation can also bring important improvements. combining efforts and bundling of alerts by different institutions might not only boost efficiency, but could also improve our understanding of alerts. because one alert may give us a more complete picture of the other alert. there is no need to compete in the area of security. there is ample opportunity to cooperate and thus make the system safer. in this respect, i welcome the recent announcement of the dutch banking federation that the five largest banks in the netherlands are investigating this kind of cooperation. the third pillar needs to address one major flaw in our current supervision : aml and cft supervision is mainly organised at national level. international cooperation and exchange of information between supervisors is often too complex. it impedes the smooth aml and cft supervision of cross - border institutions and activities. and yet, smooth exchange of information between supervisors is vital in identifying and addressing aml risks. another flaw is that there are sometimes limited resources for this supervision. and enforcement decisions may conflict with prudential and other interests. as aml supervision is organised at national level, it

of the financial system. the fourth pillar is about society having to become more effective in pursuing the real criminals. for this we need to take a much broader view, we need to invest in law enforcement, we need to look at our tax laws, we need to become more effective in combatting crime. so to summarize these four pillars i would say we need rigorous compliance with existing regulation. secondly we need smarter and more sophisticated ways of cooperation between financial institutions and between them and public authorities in the field of cdd and transaction monitoring. we need a european supervisory mechanism to guarantee an effective and consistent regulatory framework. and finally we need more comprehensive public sector action, including devoting sufficient resources to prosecution, to ensure there is less dirty money sloshing through the system to start with. climate related risks let us now turn to our next challenge. i don ’ t need to tell you how our climate is changing. you can now see the impact of higher temperatures and severe weather events everywhere you look in the world. i could spend the rest of the day reciting extremely chilling examples of our ever hotter world. i will skip that. you know these examples by now. but what i would like to talk about today is how the changing climate presents substantial financial risks to the financial sector. we can divide these risks into two main channels : physical risks and transition risks. the increasing severity and frequency of climate change - related events such as flooding, droughts and storms, present physical risks that have a direct impact on the financial sector when they materialize. and then there are the transition risks. these stem from new laws and policies, technological advances or changes in public sentiment that come with the transition to a lower - carbon economy. these factors can leave carbon intensive assets vulnerable to value reassessments by financial markets. this can happen very abruptly, or could even render these assets ‘ stranded ’. financial institutions with balance sheet exposures to the fossil fuel and utility sectors could particularly be affected. fout! onbekende naam voor documenteigenschap. that climate - related risks translate into financial risks via the physical and transition channels ( and thus fall squarely within the existing mandates of central banks and supervisors ) is now widely understood and accepted by an ever growing number of central banks and supervisors around the world. as chairman of the ngfs, the central banks and supervisors network for greening the financial system, i ’ d like to tell you about our work. in