zeti akhtar aziz : comparing financial crises special address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the tun ismail ali chair in monetary and financial economies : lecture on comparison of the financial crises : " japan and asia in 1997 - 1998 vs. us 2008 - 2009 ", kuala lumpur, 10 july 2009. * * * this year bank negara malaysia celebrates 50 years of central banking. while a number of special events are taking place during the course of this year, perhaps the most significant one has taken place yesterday. it is most meaningful that i inform you on this occasion of the public lecture organised in honour of the first malaysian governor of bank negara malaysia, tun ismail mohamed ali that yesterday the new central banking act for bank negara malaysia was passed by the parliament. this new act represents the culmination of more than two years'work to address many of the issues and challenges that are confronting central banks in the 21st century. the act provides greater clarity of the mandate for which the central bank is accountable for, ensures adequate powers to undertake these mandates, and ensures autonomy in achieving these mandates thus providing for the integrity and credibility of the decisions made by the bank. this is further reinforced by legislating the checks and balances in the bank and a higher level of transparency to the government, the legislature, the market and the public. most importantly, this act also addresses financial stability issues that have surfaced in this current international financial crisis. it is my great pleasure to welcome you to the 2009 tun ismail ali public lecture. this public lecture is now organised in conjunction with the tun ismail ali chair in monetary and financial economics at the university of malaya that was established by bank negara malaysia in august of 2000 in honour of the late tun ismail mohamed ali. it is our hope that this chair will contribute towards the advancement of knowledge in the area of monetary and financial economics. this public lecture takes place at a time of a financial crisis that is continues to unfold in the advanced economies and that now is having unprecedented consequences on the global economy. for some parts of the world, such as asia, the financial sector has largely not been affected, but the impact has been on the real sector, following the massive contraction in world trade. while this crisis started in early 2007, malaysia has seen the full impact of this crisis on our economy in the first half of this year. today, we are very privileged to have with us professor dr. tak

operations with the changes in operating environment and risk management expectations. we have learned and relearned abundant lessons from the experience of the past crisis and many of those lessons lead to changes in regulation, supervision, enforcement and risk management practices throughout the world. as these new rules are designed and implemented, we are expected to adapt and change our business models and risk practices. bank negara malaysia is adapting as well. i have highlighted earlier the development on the regulation and supervision ’ s front. allow me to highlight key developments on the enforcement front. given that combating financial crime continues to be one of our key priorities in sustaining financial sector integrity, bank negara malaysia is intensifying enforcement actions on aml / cft non - compliances and breaches of legislations. since 2012, bank negara malaysia had compounded several banks and money service business operators for various non - compliances with the anti - money laundering and anti - terrorist financing act 2001 ( amlatfa ). besides amlatfa, the new aml / cft policies are also issued under the fsa and ifsa. fsa and ifsa provide bank negara malaysia with wider enforcement powers including the administrative and civil sanctions for breaches under these acts. fsa and ifsa also allow for enforcement actions taken under these legislations to be made public. this means that the reputational stake for non - compliance has been set higher. bis central bankers ’ speeches this is necessary to strengthen financial sector ’ s compliance to aml / cft policies and preserve the integrity of the financial system from being abuse for criminal activities. bank negara malaysia recognises that the vast majority of the dnfbps seek to comply with the law and for certain profession such as the lawyers and the accountants, through their ethical obligations. however, given that the controls on money laundering risks implemented at the financial institutions are increasingly tightened, there is this emerging consequence that dnfbps, particularly the legal professionals, are increasingly becoming more attractive for the criminals to launder their ill - gotten gain. according to the report published by the fatf on money laundering involving legal professionals, key among those factors are the perception that the involvement of legal professionals provides a further step in the chain to frustrate investigation by law enforcement authorities. thus, it is imperative for dnfbps to increase their awareness and understanding on how their industry can be susceptible to money laundering and takes necessary measures commensurate with the money laundering and terrorism financing risks