challenges and are taking measures to maintain their positions or space in the market. however, to do this, societies continue to seek the registrar ’ s endorsement to venture into these risky activities. we wanted to do away with that and therefore have proposed some legislative reforms to give boards and management more opportunities and decision making in operation of their institutions. bis central bankers ’ speeches 3. increased regulatory compliance in discussing the benefits of credit unions, i am mindful of the increasing need for regulatory compliance globally and we in the pacific are no different. ladies and gentlemen, i know you will agree with me that credit unions have evolved over time. there has been a lot of growth in the movement in terms of membership, the growth in asset size and how credit unions do business ( refer booklet by occul ). we cannot allow the movement to be stagnant, it has to be guided to adapt to global and domestically driven changes. in doing so, legislative reforms have to be made to enable appropriate and relevant regulation and supervision by the regulator. as we all know, the high demand for regulatory compliance increases costs. this is inevitable but one that should be balanced. increase in regulation can be due to a number of reasons : a policy change by government or the standard setters. effects of globalisation, for example the global financial crisis. technological innovation is becoming the order of business operations today and if credit unions are to survive, reforms should be encouraged to enable changes and enhancements to be made. technology is changing the landscape of the way business conduct themselves. for us in the pacific, the population is scattered throughout many small islands and into the rural communities, which makes provision of financial services and accessibility for these services very costly. technology like the use of mobile phones by credit unions will enable availability and accessibility of services to reach the rural majorities. thirdly, there is increasing trade across borders made possible by technological innovation and whilst it is good, it has its own risks such as money laundering, terrorism financing and scams. thus, regulation must be appropriate to govern them. questionable practices by those entrusted with the duty to manage credit unions resulting in enacting rules to correct those practices. topical issues today include financial corruption, insider trading, and conflicts of interest. 4. global regulatory trends ladies and gentlemen, the credit union sector in the pacific plays a crucial role in helping to meet financial, economic and social needs of our people. however since we are part of a global village, whatever happens in the

, the easier it is to share relevant information and the higher the chances for an early identification of risks. this will improve the quality and promptness of the bank ’ s response to any occurrence of risk or non - compliance. it is also crucial that institutions invest sufficiently in talent development within the compliance function. at the board - level, this priority is often overlooked. however, cultivating a group of professional compliance officers within a bank is essential. they must be fluent with the business operations of the bank, plugged - in to organisational developments, and have the authority and network to engage effectively throughout the bank. possessing professional qualifications also play a key role in this, such as the certification in regulatory compliance offered by the asian institute of chartered bankers, in conjunction with the international compliance association. today, banks are realising how important it is for them to get in front of compliance issues. failure to realise this is an expensive error. banks need to invest and build systems ; and create a culture that ensures that they are the first to identify and address compliance failures, and proactively communicate them to the regulators and other authorities. beginning next year, we will be raising the stakes further by publishing enforcement actions taken by bank negara malaysia. specifics will be mentioned, including the name of the banks, nature of breaches and remedial actions taken. in addition, we are also working towards introducing a mandatory employment reference process for the industry. this will require banks to keep and share records of misconduct by employees to facilitate informed recruitment decisions. conclusion my aim here is to provoke a much broader view of compliance, one that is strategic as opposed to operational. 4 / 5 bis central bankers'speeches compliance supports smart, efficient and balanced regulation. this, in turn, builds trust and confidence among the public, which is the very foundation of the banking industry. only with a strong and reliable banking industry can we serve the economy and the overall well being of our people. 5 / 5 bis central bankers'speeches