macao has been procyclically issuing supervisory guidance on risk management, internal control with a view to maintaining the stability of our financial system. to align with international understanding and standards, guidelines on anti - money laundering ( aml ) and countering the financing of terrorism ( cft ) have been promulgated and seriously enforced. we have close cooperation with other regulatory authorities and international agencies in all these aspects. as a result, all our regulatory efforts are being kept up - to - date with the requirements of internationally accepted standards. for instance, the aml / cft guidelines have recently been revised by the monetary authority of macao. the move arises from the recommendations of the mutual evaluation raised by the asia / pacific group on money laundering ( apg ) and the offshore group of banking supervisors ( ogbs ). the opinions of practitioners and findings in the course of aml / cft inspections have also been taken into account. we emphasize on the enhancement of customer due diligence ( cdd ) measures to be undertaken by banks and insurance companies. particular attention is paid to offshore companies who are required to implement proper and stringent account opening and subsequent monitoring procedures. to this end, i am very pleased to see that this seminar has been organized to offer a very valuable opportunity for financial institutions of macao to acquire a more indepth knowledge of the institutional arrangements of international business companies and the practices and methodology required in exercising cdd measures on offshore companies. today, we are privileged to have mr. baker with us to share his versatile and professional experience. it is a timely arrangement that mr. baker is here today to impart to us insightful thoughts and valuable experience in this respect when the msar is striving to diversify its economic activities. i am very sure that participants will benefit much from our knowledgeable speaker whose input is certainly conducive to enhancing the reputation of our financial industry. thank you!

to snowballing effect impairing the functioning of the entire financial system due to interconnectedness. good governance ensures customers ’ and other stakeholders ’ trust in banks and non - banking financial intermediaries. d. among the financial intermediaries, banks occupy a special place due to their centrality in the transmission of monetary policy and the functioning of the payment and settlement systems. they also are the beneficiaries of deposit insurance which may weaken their incentive for strong management monitoring as well as monitoring by other stakeholders including depositors. good corporate governance would ensure strong internal controls which would offset the weakened incentive for monitoring. a robust and stable banking system is an absolute necessity for a well functioning economy. corporate governance – international experience academic literature suggests that post 2000, significant developments happened in the corporate governance framework internationally. for e. g., in the us, corporate scandals including enron and world com resulting from failure in corporate governance, led to sarbanes – oxley act with an aim to improving the accuracy and reliability of corporate disclosures by way of enhanced oversight role of boards, corporate responsibility, certification of accuracy of financial transactions by top management, setting standards for auditor independence etc. however, it is widely acknowledged that even the enhanced framework could not mitigate the weaknesses which played a significant role in contributing to the global financial crisis ( gfc ). there are ongoing debates regarding the manner in which flawed governance practices played their part in the crisis. while poor implementation is blamed by some, systemic failure of corporate governance is attributed by others as the cause. oecd and uk financial bis central bankers ’ speeches regulatory council share the view that the shortcomings were not with the corporate governance codes / principles per se, but were in their implementation. governance and ethics lack of ethics too played a significant part in the erosion of governance standards in institutions. values and culture define ethics. ethics are principles that recommend proper conduct, help distinguish right from wrong and drive people to do the right thing even when no one is looking. while ethical behaviour is a minimum requirement for any dealing or transaction, it becomes all the more essential for financial intermediaries, and particularly for banks, for whom trust is the cornerstone. honest and prudent behaviour by banks and other financial intermediaries is integral to their reputation and public confidence in the system. however, the conduct of financial institutions that caused the crisis does not suggest any measure of enduring interaction between ethics and banking. in fact, financial markets and entities