the relevant bank. the most important challenges confronting islamic banks are risks arising from financing formulas and shari'a compliant banking, especially investment risks, method of applying " basel ii " proposals, capital market and financial derivatives risks. in addition, islamic banks may bear a wide range of risks that differ, in nature, from those borne by commercial banks. in this connection, it is necessary to emphasize that the role entrusted to the supervisory authorities is to pursue a comprehensive control method based on risk assessment process and not to make any discrimination in a way that may suggest that shari'a compliant banks are being rated differently or confronting larger risks. corporate governance, risk management, transparency, disclosure, and internal control requirements in islamic financial services industry should always be developed, and adjusted to meet the needs specified for islamic banks, especially that an important part of the work of these banks is based on impression and reputation of the nature of their work. therefore, these banks should be aware of the role entrusted to them, especially the ethical one. the nature of risks faced by islamic banks may raise specific issues in terms of assets and inventory assessment, investment costs, regular income and recognition of losses, adequacy of guarantees and others. we must emphasize here the importance of continued development of mechanisms to cover such risks. this underlines the importance of integration into global financial markets, encouragement of competition, and provision of a proper climate for on - going innovation so that islamic banks can consolidate their positions in all markets and boost their ability to provide products for all segments of customers. on the other hand, a controversy is sometimes raised and comparisons are made between islamic and conventional banks in terms of risk degree, exposure to insolvency, and the argument ensuing concerning capital adequacy. however, the important point is the awareness and understanding the nature of risks, development of mechanisms to cover such risks, and the ability to compete in markets and meet the needs of customers. perhaps it is imperative here to emphasize that it is important for islamic banks to provide all information about their activities and financial statements with full transparency, especially that they bear moral responsibility. this would enhance their credibility, contribute to their good reputation to be accepted on a broader range, and remove any false beliefs concerning their activities. dear brothers, a number of central banks and supervisory authorities have recognized the nature of risks confronted by islamic banks and pursued a supervisory approach based on measurement of risks. thus, they have developed appropriate mechanisms for banking supervision depending on the type

money laundering and the large scale of this activity, which is estimated by the international monetary fund ( imf ) at 2 to 5 percent of global gdp, there have been international and regional concerted efforts to combat it. the financial action task force ( fatf ) was established by the end of the eighties of the last century and the financial action task force for the middle east and north africa ( menafatf ) was founded in the middle of this decade. the kingdom is an active member in these two groups. in 2003, the anti - money laundering law, which provided for criminalizing offenses related to money laundering was issued, followed by its executive regulations. the issuing of this law and its executive regulations has helped government organs and their subordinate entities concerned with combating money laundering to develop necessary mechanisms and procedures to implement the anti - money laundering law and related rules and ensure that they are fully complied with. these organs have established specialized departments responsible for implementing these rules ( compliance function ), appointed qualified human resources ( compliance officers ), and allocated human and financial resources necessary to enable them to perform their functions properly. at the same time, each supervisory government authority has enacted rules and regulations derived from the provisions of the anti - money laundering law and its executive regulations and included them in its by - laws in a way commensurate with the work of those organs. within the framework of the kingdom ’ s efforts to combat money laundering, i would like to highlight the following : 1. the permanent committee for combating money laundering, which consists of representatives from seven ministries and government departments, has been established at sama to deal with issues related to money laundering. 2. the kingdom has hosted numerous domestic and international conferences and symposiums, and offered training courses on anti - money - laundering issues. the first meeting of the fatf outside paris was held in the institute of banking ( iob ) in 1994. in addition, there has been effective participation of the kingdom in the membership of the financial action task force ( fatf ) and permanent participation in the fatf ’ s meetings. 3. the anti - money laundering unit was established at sama and is provided with highly qualified and trained staff. since 1995, commercial banks have been obliged to set up similar units to cooperate with each other, with sama ’ s unit and with the concerned security authorities. 4. in 1995, sama issued guidelines to all banks operating in the kingdom on preventing and combating money - laundering operations. these