Even in Japan, where ownership of large corporations is not in the hands of families, long-term corporate relationships and cross-shareholdings have dictated business. This was how entrepreneurship evolved in East Asian societies, and among the overseas Chinese in South East Asia. Many of these family firms were hugely successful, driven by the business acumen and entrepreneurial drive of the founding patriarchs, and supported by a web of networks, or guanxi. But the world has changed. Family relationships may be an adequate basis for running a medium sized company, but not for an MNC employing tens of thousands of people. To be world-class, companies need to be led by the best man for the job, and this person is not likely to come from the same family, generation after generation. And business based on relationships rather than hard-headed commercial calculations is prone to abuse and under-performance, as was shown in the Asian crisis. It will not be easy for the families to relinquish control. The instinct to hand an heirloom down the generations is still strong. There are also real practical difficulties. If the families sell out, who will the buyers be? Who will take charge of the companies? Most Asian countries lack a group of institutional shareholders who can exert market discipline and defend minority shareholder interests, like the  3  Straits Times, 26 January 2000. BIS Review 76/2000  4  mutual and pension funds in the US.
For instance, the Economist magazine estimated that about USD 500 billion to USD 1.5 trillion is laundered through banks each year. Further, the Financial Action Task Force (FATF) - an intergovernmental organization under the auspices of the Organisation for Economic Co-operation and Development (OECD) also estimates money laundering to be in the ranges of USD 590 billion to US1.5 trillion. As a percentage of world economic output, money laundering accounts for about 2% to 5%. Obviously, given the secrecy and the illegal nature of this business, it is difficult to tell exactly the extent of money laundering. Nevertheless, these figures give us an indication of the magnitude of the problem. In this regard, financial institutions, in particular, banks provide a conduit through which money (including laundered money) flows. Because of this, the financial system is the focal point of antimoney laundering initiatives because dirty money is most visible when it is first introduced into the financial system. Ladies and Gentlemen, before I proceed in discussing the various aspects of money laundering including stages in money laundering, its effects on the economy, the global and local initiatives to fight money laundering and the role that banks can play in combating money laundering, allow me to define what money laundering is. For the purposes of my presentation today, I shall define money laundering as the method of hiding, mixing and disguising the proceeds of criminal activities through legally operating institutions for the purpose of destroying the origins of the proceeds.