What came to be known as the “Rajan risk” is linked with the structure of incentives of managers and institutions in the new financial environment. The gain of importance of market-based non-regulated institutions and the reduced weight of traditional banking, gives prominence to compensation schemes more linked to returns which induces managers to incur into riskier transactions.
Concerns about the risks that AML/CFT present to the stability of our financial systems should be addressed collectively. Events like this are therefore of utmost importance as it helps to bring all stakeholders together under one roof, because as we are already aware the fight against money laundering and terrorist financing cannot be achieved in isolation.