, but not all regions have benefitted equally here in the second district. some portions of upstate new york have benefitted from an influx of technology companies and other industries, while other regions remain challenged due to a lack of population growth. later today we will hear from two of our economists who will share national and regional economic trends. also in the spirit of looking forward, i can share some views on what community bankers can expect from the supervisory process. examiners are keenly focused on emerging trends around funding costs and liquidity risks. bankers consistently share with us the challenge of raising core deposits to fund loan growth. community banks compete not only with other community banks for deposits, but also with credit unions and larger institutions. and, these larger counterparts are actively courting customers through direct mailers and offering competitive rates. data in the second district show cost across most deposit categories have increased with a slight uptick in the higher cost funding sources such as borrowings. data for the largest banks exhibit a comparable trend, but they control a larger market share. i expect another area of focus during the examination process will be interest rate risk and related challenges. bankers have shared with us that customers are demanding higher rates on deposits, yet those same customers are reluctant to pay higher rates on their loans. what is a banker to do in trying to maintain a productive, long - term relationship? we are seeing signs of lower net interest margins ( nim ), where the average nim in the second district is 3. 47 percent compared to the national peer average of 3. 71 percent. examiners will be reviewing initiatives by community bankers to partner with “ fintech ” firms. we know there is competition from non - bank providers who have the capacity to provide automated loan pre - approvals in minutes and loan closings within days after approval. today, you will hear from a panel of your peers on how fintech is changing the way their firms do business, and how they mitigate the risks associated with outsourcing. in my view, new innovations from the fintech space have the potential to fundamentally transform the provision of financial services. as i ’ ve said elsewhere, this disruption brings both opportunity and risks and that need to be managed. 2 a third forward - looking topic is the coming implementation of accounting changes for reserves, known as the “ current expected credit loss ” approach or cecl. one of our colleagues from the board of governors will join us later to address a common question raised by our bankers

but we must be honest with each other about what we ’ re doing, what we ’ re not doing, and how we can improve. let me highlight just one example to demonstrate why i am so focused on financial crime right now. as i ’ m sure many of you have read, in february 2016 international criminals used fraudulent wire transfer instructions to steal and launder many millions of dollars from bangladesh bank ’ s account at the new york fed. bangladesh bank is the central bank of bangladesh. some of those funds have been recovered, but bangladesh bank is still working to recover most of its loss. we at the new york fed are still helping them to do so. simply put, it was not just bangladesh bank that was wronged. the new york fed — my client and employer of more than 20 years — was wronged as well. so i come to you today not as a dispassionate observer. i come to you today bearing the scrapes and bruises and scars of our own experience at the new york fed. this morning, i will speak about where we are and where i think we should go from here. my message, in brief, is that we are all in this together. the integrity of the payment system is critical to the u. s. and global economy. financial institutions and the official sector must do their utmost to protect the system from financial crime. 1 / 6 bis central bankers'speeches where are we now? the payment system can be used to facilitate many types of crime. fraud and theft have accompanied money transfers for as long as there has been money. the romans considered counterfeiting to be a form of falsum, which was a fraud against the public. 2 and, of course, willie sutton provided the timeless, common - sense explanation for bank robbery. money laundering is, by contrast, a more recent development in criminal law. in the united states, anti - money laundering law reflects an evolution in focus from banknote tracking to combatting narco - trafficking to counterterrorism. rather than take you through the legislative history of this evolution, i want to refer you to the financial crimes enforcement network — or “ fincen, ” for short. its website contains short and accessible histories of major anti - money laundering laws. 3 these summaries highlight the important public goals of the bank secrecy act and other anti - money laundering statutes — why they are more than just a compliance cost. one theme that emerges is the increasing reliance on