9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  Chart 8: G7 growth increasingly reliant on consumption Investment Private Consumption Net Trade Other GDP  Contributions to four-quarter growth (%) 3  2  1  0  2011  2012  2013  2014  2015  2016  2017  2018  -1 2019  Sources: Eikon by Refinitiv, IMF WEO, OECD and Bank calculations. Notes: Growth in real purchasing power parity (PPP)-weighted GDP. As the experience of Brexit has shown, the indirect effects of trade tensions on business confidence and investment can be much more material than the direct effects alone. UK business investment has flat-lined since the referendum, underperforming both previous recoveries and the international experience (Charts 9a and 9b). There is also evidence that these uncertainty effects are holding back foreign direct investment in the UK.7 The UK’s experience can be used to assess the extent to which the deteriorating trade outlook can explain the sea change in financial markets. 7  Data from the Department for International Trade indicate that the number of new FDI projects in the UK in 2018/19 fell to its lowest level in five years.
After all, reputation and legal risks can be costly too. 20. The MAS expects boards and senior management to have ownership and oversight of ML/TF risk control issues. FIs therefore must put in place an effective reporting framework to keep board and senior management well apprised. In turn, Board and senior management must oversee proper resolution of ML/TF risk control concerns as flagged out internally by your staff, by auditors or regulators. 21. The next area relates to risk culture. Clearly, culture is not easy to prescribe as a practical matter. Every staff in the FI, not just its management, contributes to its culture. However, management usually has decisive influence on a firm’s overall culture by setting the right “tone from the top” which must be reinforced through supporting actions to secure the commensurate “echo from the bottom”. Those in the various lines of defences must be empowered and recognised for doing their jobs well. 22. My remarks so far have discussed the MAS’ approach to Regulations and Supervision. Let me now touch on the next element of our framework – Enforcement. No matter the amount of regulations and notwithstanding the heightened intensity of our risk-based AML supervision, those bent on breaking our ML/TF laws will always try to find ways to exploit any weaknesses in control systems or practices. This can happen especially if an FI’s governance and culture fall short and appropriate due diligence is overlooked in lieu of business motivations.