to face high money laundering risk and medium high terrorism financing risk. the sector records the highest value of cash transactions and high risk customers ; and provides the highest number of high risk products compared to other sectors within the financial industry. this reflects the central role of the banking sector in intermediating money flows within an economy. one important compliance function that needs to be undertaken is the identity of the ultimate beneficial owner of companies, assets and financial transactions. financial institutions need to have controls and procedures to identify, verify and conduct due diligence on the beneficiaries. this must be complemented by a rigorous monitoring process. adherence to this requirement will inject transparency, accountability and ensure the integrity of the financial system. it will prevent criminals from hiding their ownership of companies and assets through complex methods and vehicles. i last spoke at this conference in 2011. the theme of the 2011 conference was “ raising the bar in enforcement and compliance ”. looking back and taking stock of the present state, i am glad to see that the whole industry has matured and progressed in such a significant way. this is validated by the ncc report that the sector ’ s control measures for both money laundering and terrorism financing are strong. further, fines imposed by the bank on financial institutions has decreased over the past few years, reflecting the progress made by institutions in ensuring adequate controls. i hope the industry continues to strengthen its capability to fight crime. another area in which progress has been made is the priority accorded within each institution to compliance. the focus of the compliance function has developed to become more comprehensive as financial institutions have a better understanding of the threats and risks involved. with increasing awareness of the direct and indirect costs of non - compliance, the compliance function is no longer viewed only as adherence to rules set by regulators, but is instead, an integral part of the organisation ’ s culture. the very fact that the theme of this 4 / 5 bis central bankers'speeches conference is on reshaping the future, governance and transparency is a testament to this. conclusion i spoke at length today about the responsibility that we have to combat crime and the ways to do so. let me end by saying that eradicating financial crime makes good business sense. financial crime is a cost and burden to all of society. robust governance and greater transparency is good for business. it creates an environment of trust and a level - playing field for businesses to flourish. this is important as we seek to ensure longevity and continuity of businesses and

boundaries of innovation, the industry needs to understand the risks that they pose. one example is the rise of mobile banking, e - payments and virtual assets. in malaysia, mobile banking transactions have multiplied greatly, from around 500 million transactions in 2016 to almost 1. 3 trillion transactions in august this year. the ubiquity of mobile internet and increasing dependency on our smartphones is expected to increase the importance of this medium. this technology fosters financial inclusion and offers potential for greater customer engagement. one such potential is in meeting and strengthening know - your - customer requirements. by leveraging on technology, financial institutions will be able to conduct e - kyc with greater efficiency while making the customer experience more seamless. one such solution is being tested in the bank ’ s fintech sandbox. another area of growth comes from virtual assets. between the end of 2016 to date, market capitalisation of virtual assets have grown by an extraordinary rate of over 1000 % from around usd 20 billion to around usd 200 billion. while the technologies behind virtual assets may present great potential to revolutionise the way we conduct finance, the risks associated with virtual assets is an area that deserves much scrutiny. features that may allow anonymous or pseudonymous transactions and easier crossborder transfers of values carry money laundering and terrorism financing risks that need to be addressed. the fact that the reason for many virtual currencies is to skirt the formal financial system adds further to the reservations of many. on this front, the financial action task force ( fatf ) has published a number of reports on risks and guidance for risk - based approach in mitigating money laundering risks associated with technology such as virtual assets and internet - based payment services. understanding, monitoring and supervising virtual assets would require development of new techniques and methods. last but not least, in watching out for new and emerging risks, we must not forget that old risks may rear its head in new ways. there are two issues in relation to this : firstly, while the number of terrorist attacks have declined over the past few years, the nature of terrorism and terrorism financing have evolved. new modus operandi such as lone - wolf attacks and remote terrorist cells, as well as availability of new products in the financial sector, such as prepaid cards and mobile banking, has given rise to new patterns and methods of financing terrorism that are different from a decade ago. we must not forget that dealing with these financial crimes should remain a high priority due to the direct and immediate human costs