a financial institution should adopt a check and balance approach in management. in the heyday, deal makers in a financial institution are the golden boys. they tended to disregard those who are supposed to control risks. normally, when there was an argument over whether a certain deal should be done, the senior management, whose year - end bonus may depend on the current year revenue, or who are more concerned with the profit and loss account of the institution, would invariably stand on the side of the deal maker. this is usually the root of huge losses to be incurred later. to harness risks, the risk management function should be vested with more authority. the internal control function should go to board level. there should be a minimum level of knowledge of internal control to be required for all audit committee members. knowledgeable internal controllers and anti - fraud experts may be hired by financial institutions to implement risk - assessment and fraud prevention measures. measures and procedures are to be implemented to prevent management overriding internal control systems. the greatest safety to ensure the stability however comes from self disciplined practitioners of the financial sector. legislations and regulators are serving merely as directions and referees. it is the professional skills and ethics of practitioners which will give the greatest comfort and protection to a financial institution and hence the financial system as a whole. it is therefore the endeavour of human resources function to provide adequate training in these respects, especially ethics, in order to have a long term solution which warrants the stability of the financial system. macao returned to china in 1999. this year is the 10th anniversary of the founding of the macao special administrative region. under the principle of “ one country, two systems ”, “ macao people ruling macao ” and “ high degree of autonomy ”, macao ’ s economy has grown by leaps and bounds. the financial sector has burgeoned in tandem with the spectacular performance of the overall economy. we have witnessed a surge in deposits, assets and profits in our financial sector. capital adequacy ratio for the banking sector is well above what is required by the basel committee while non - performing loans ratio lingers at a low level. our financial system is not immune to the financial tsunami but it has emerged unscathed. there is however no ground for complacency. the financial sector and the regulators are adopting a prudent and cooperative approach and have been working in harmony in the best interest of the community. we are doing our best to attract qualified people to join the financial

effectively curb and combat these activities. the measures adopted by macao in aml can be traced back to 1991 in which decree - law no. 5 / 91 / m was promulgated to enable the government to confiscate assets derived from drug trafficking. the 1995 penal code unequivocally stipulates that all assets or gains through criminal activities shall be confiscated. the law on organized crime, decree - law no. 6 / 97 / m in 1997, goes further to deal with crimes relating to conversion, transfer or dissimulation of illicit assets or gains arising from criminal activities. decree - law no. 24 / 98 / m promulgated in 1998 implements mandatory reporting of suspicious activities, the entities under the supervision of amcm are especially obliged to do so. in 2002, law no. 4 / 2002 was passed to implement measures under international conventions signed and ratified by the central government and applicable to the msar. specifically, it enables the anti - terrorist measures under resolution no. 1373 of the united nations security council to be applied to macao. in april, 2006, the sar government promulgated law no. 2 / 2006 on “ prevention and repression of money laundering related crimes ” and law no. 3 / 2006 on “ prevention and repression of terrorism related crimes ”. these two legislations clearly define activities relating to money laundering and terrorism. they also provide that all persons including legal entities bear criminal liability to activities relating to money laundering and terrorism, heavier penalty shall apply, reporting entities shall be protected and reporting entities are forbidden to divulge reporting information to third parties. in may and august of the same year, the sar government promulgated administrative regulation no. 7 / 2006 and executive order of the chief executive no. 227 / 2006 which require all financial institutions, casinos, off - shore companies, auditors, accountants, tax consultants, notaries, pawn shops, real estate agents and entities selling articles of high value to report suspicious activities to the newly set up financial intelligence office which will collect and analyze such information. as far as financial system is concerned, amcm has been putting its utmost efforts in promoting the implementation of aml / cft measures by financial institutions. the “ financial system act ” promulgated in 1993 requires, based on the standards set by the basel committee, all credit institutions to identify their customers and keep records of transactions in addition to scrutinizing the properness and qualification of the shareholders and senior management.