arthur yuen : welcome remarks - hkma anti - money laundering and counter - financing of terrorism regulatory technology forum welcome remarks by mr arthur yuen, deputy chief executive of the hong kong monetary authority, at the hkma anti - money laundering and counter - financing of terrorism ( aml / cft ) regulatory technology ( regtech ) forum ( excerpt ), hong kong, 22 november 2019. * * * 1. first of all let me welcome you all to this aml / cft regtech forum, which we intend to be the first in a series. 2. in particular let me thank everyone for the very positive response and participation of key stakeholders including the fintech association of hong kong, experts, academia, other regulators as well as our partners in government bureaux, companies registry, joint financial intelligence unit ( jfiu ), law enforcement agencies ( leas ) and hong kong association of banks. 3. let me start with a question that speaks to why we are all here today : how effective are we, really, in our important role in anti - money laundering and counter - terrorist financing? we all recognise the efforts of the banking sector over many years – and continuing today – in helping to combat money laundering and terrorist financing. this has recently been praised by the financial action task force ( fatf ), which gave us a very good score card in its mutual evaluation report on hong kong. 4. but, despite the mutual evaluation result, no system is perfect and most of the challenges we face – money laundering from fraud, tax crimes and corruption to name but a few – are global in nature. and the continuing efforts of the banking sector also represent challenges of their own : banks filed over 68, 000 or 90 % of the suspicious transaction reports ( strs ) with the jfiu in a year. and that is just the strs : we all know what that means in terms of the massive amount of data that banks are monitoring, screening and analysing on an ongoing basis. 5. the more difficult part of the answer to my question therefore means looking forward and requires vision and – dare i say it – aspiration – because we know that fatf evaluations represent a snap shot. there are always new and emerging risks, to which the hkma and banks have stayed vigilant and agile ; criminals are also exploiting new technology and innovations to create terrible harm to consumers and the integrity of the financial system. banks that play a frontline role

, it is likely that the growth potential of japan ’ s economy has recently been structurally weakening. the reasons for the weakening growth potential are complicated. broadly speaking, it seems that the system and the business practice which were formed in the past higher growth period as well as firms ’ behavioral principle could not sufficiently adapt to two large changes going on since the 1990s. the two changes in the business environment were the intensification of global competition and the domestic demographic vortex. the first change, global competition, accelerated in the 1990s. globalization enabled various and quick combinations of advanced economies ’ capital and technology and emerging economies ’ labor force, and opened the door to emerging economies to high growth. potential business opportunities expanded beyond borders, and, in that regard, globalization was a change that brought new growth opportunities for japanese firms and, eventually, japan ’ s economy. at the same time, globalization ushered in a “ mega competition ” era. japanese firms were strongly required to gain strength to promote differentiation from many overseas rivals and become among the first to tap potential demand. while it is a fact that japanese firms have been going in that direction, the speed has not necessarily fast enough, compared with the speed of changes in the business environment. the second change, the demographic vortex has also progressed markedly since the 1990s. the population of workers, namely, the working - age population, defined as the population between 15 and 65 years old, started to decline since the mid - 1990s and the pace of decline has been accelerating. bis central bankers ’ speeches such change in the demographic composition could induce a shortage of labor and becomes a factor in reducing growth potential from the supply side. at the same time, on the demand side, the change will prompt structural changes of the demand content because necessary goods and services will differ, according to each stage of life. mass consumption markets, including housing and consumer durables, will shrink, while demand for various goods and services that raise the quality of life, such as medical and nursing care services, will increase, at least potentially. if changes on the supply side cannot catch up with the substantial changes in the demand structure, potential needs will not lead to actual spending and remain untapped, while excess supply will continue in markets for existing goods and services and economic activity will be under downward pressure. in japan ’ s economy since the 1990s, it is likely that a supply and demand mismatch has chronically remained and continued to act as one of the reasons for inducing low economic growth. background