The fact that the reason for many virtual currencies is to skirt the formal financial system adds further to the reservations of many. On this front, the Financial Action Task Force (FATF) has published a number of reports on risks and guidance for risk-based approach in mitigating money laundering risks associated with technology such as virtual assets and internet-based payment services. Understanding, monitoring and supervising virtual assets would require development of new techniques and methods. Last but not least, in watching out for new and emerging risks, we must not forget that old risks may rear its head in new ways. There are two issues in relation to this: Firstly, while the number of terrorist attacks have declined over the past few years, the nature of terrorism and terrorism financing have evolved. New modus operandi such as lone-wolf attacks and remote terrorist cells, as well as availability of new products in the financial sector, such as prepaid cards and mobile banking, has given rise to new patterns and methods of financing terrorism that are different from a decade ago. We must not forget that dealing with these financial crimes should remain a high priority due to the direct and immediate human costs involved. Secondly, we must also not forget that even with the emergence of the technologies described earlier, we are still very much reliant on cash. Demand for cash worldwide continues to rise. For Malaysia, currency in circulation has increased by around 150% over the past decade.
Adherence to this requirement will inject transparency, accountability and ensure the integrity of the financial system. It will prevent criminals from hiding their ownership of companies and assets through complex methods and vehicles. I last spoke at this conference in 2011. The theme of the 2011 conference was “Raising the bar in enforcement and compliance”. Looking back and taking stock of the present state, I am glad to see that the whole industry has matured and progressed in such a significant way. This is validated by the NCC report that the sector’s control measures for both money laundering and terrorism financing are strong. Further, fines imposed by the Bank on financial institutions has decreased over the past few years, reflecting the progress made by institutions in ensuring adequate controls. I hope the industry continues to strengthen its capability to fight crime. Another area in which progress has been made is the priority accorded within each institution to compliance. The focus of the compliance function has developed to become more comprehensive as financial institutions have a better understanding of the threats and risks involved. With increasing awareness of the direct and indirect costs of non-compliance, the compliance function is no longer viewed only as adherence to rules set by regulators, but is instead, an integral part of the organisation’s culture. The very fact that the theme of this 4/5  BIS central bankers' speeches  conference is on reshaping the future, governance and transparency is a testament to this.