, when in late 2004 the bank announced our intention to introduce reforms, the european treasury department of one of the largest companies in the world wrote to me in the following terms : “ i write to express our support and appreciation ….. the excessive volatility in the overnight market precluded high - quality issuers.. from participating. … the steps you are taking will surely increase the depth, stability and overall liquidity of the sterling money market. ” that kind of support has been a great encouragement. in terms of risk management, many companies swap fixed - rate term borrowing ( and other cash flows ) into floating - rate. this can be into a six or three - month libor rate of interest, or into a stream of payments linked to the overnight money market rate. in the uk, the overnight - index - swap market has developed rather less than its counterpart in the euro area, which is used by large non - financial companies. one obstacle seems to have been the intra - day volatility in the sterling market, which has entailed uncertainty about the spread between the average overnight rate on any particular day ( as measured by the sterling overnight rate index average, or sonia ) and the rate actually paid on overnight cash at different times during the day. many market participants believe that if the reforms introduced yesterday significantly reduce intra - day volatility, the sterling ois swap market will grow, making it a more useful risk management tool. the evidence of corporate treasurers as placers of short - term money is more concrete. for a few years now, uk companies ’ domestic operations have been producing surplus cash flows : £12bn, or about 1 % of gdp, in 2005. the counterpart has, of course, been an accumulation of financial assets. a lot of that has gone in to the money markets – in particular, holdings of call - deposits with banks ( chart 4 ) and investments in money market funds. in placing that liquidity, you should be in a position where you need to negotiate only the spread paid relative to a stable money market rate, not the underlying rate itself. our overhaul of the system should deliver that. by taking the noise out of the sterling money markets, we aim to achieve greater stability and greater transparency. that won ’ t revolutionise your businesses, but i trust that it will bring a welcome reduction in the avoidable uncertainties you confront. business risk management and pension - scheme uncertainties at an aggregate level, the recent financial

to counter the risks of money laundering and terrorist financing, rather than merely looking at technical compliance. this is indeed very relevant to the theme of this year ’ s conference “ raising the bar in compliance and enforcement ”. as malaysia ’ s aml / cft regime grows in maturity, the benchmark for compliance by financial institutions will be measured more in terms of its effectiveness in deterring and preventing financial crimes before they occur, and in effectively supporting the relevant law enforcement agencies to bring the perpetrators to justice when such crimes happen, despite our best efforts. in this regard, i urge the industry to take advantage of the knowledge and experience of the panel of experts assembled here at this conference, to better understand and prepare for the implications of the review of the fatf 40 + 9 recommendations, and the expectations on financial institutions and boards of directors moving forward. for bank negara malaysia, the enhancement to the nation ’ s infrastructure to combat financial crimes will remain as one of our key priorities. in this regard, our role as malaysia ’ s primary financial regulator will continue to focus three broad areas. the first is to deter and prevent criminals from abusing the financial system to be the conduit for illegal activities by ensuring the continued effectiveness of malaysia ’ s legal and other relevant infrastructure, systems and processes in combating financial crimes. secondly, is to ensure all financial institutions continue to strengthen their defences against such threats and risks via our regulatory policies as well as risk - based supervisory and surveillance activities ; and thirdly, to strengthen collaboration between the financial industry with other domestic and international stakeholders in aml / cft initiatives to protect the integrity and stability of our financial system, including implementing capacity building programmes, such as this conference. while the financial sector has, over the years, strengthened its risk management and control functions to combat financial crimes, a higher degree of emphasis and attention by senior management and the board, on issues relating to aml / cft, can further improve the standards of compliance and the effectiveness of measures put in place to fight against money laundering and terrorist financing. we also observed that financial institutions exhibiting effective defences against financial crimes shared four common attributes in their aml / cft framework. these are : ( i ) well developed and clearly articulated policies and procedures ; ( ii ) effective governance structure, particularly on the compliance function ; ( iii ) incorporation of aml / cft compliance assessments in the audit and capacity development programmes ; and ( iv ) increased and effective use of information technology and management