The revised policies also aimed to address implementation issues faced by both the reporting institutions and the supervisors as well as to incorporate FATF requirements under the revised standards. To ensure consistency of AML/CFT policies across the sectors, the revision was carried out jointly with other financial supervisors such as the Labuan Financial Services Authority and the Securities Commission. Extensive consultations and engagements were undertaken with the industry players both during pre and post issuance of the policies. The consultations provided a broad range of opinions and support. Whilst majority of responses were supporting a risk-based approach, concerns were also raised on the cost and burden of compliance. Bank Negara Malaysia recognises that the cost of implementing the Customer Due Diligence under the risk-based approach may be high at the early stage of implementation but the establishment of robust risk framework that commensurate with the risks of your institutions will minimise the institutions’ reputational risk and would also lower the overall costs in the long-run given the ability for reporting institutions to focus resources to the right area. Governance and risk culture Let’s now turn to governance and risk culture. Governance refers to actions, process, traditions and institutions by which authority is exercised and decision are taken and implemented. A good governance is, therefore, a mixture of legislation, non-legislative codes, self-regulation and best practices, structure, culture and management and board competency. If we take a step back and reflect, we will notice that risk governance is woven through the risk management framework.
G20 has set a comprehensive work program to enhance the global financial system, including the establishment of the Financial Stability Board (FSB) in April 2009, attaining significant progress in the regulatory area and capital adequacy standards, liquidity risk management, compensation rules for senior executives in the financial sector, and transparency in registering hedge funds and rating agencies. Hopefully, the application of these standards would enhance significantly the financial positions of global institutions in the coming years. With this background, the Saudi economy has not been affected considerably by the global financial crisis due to conservative and prudent oversight and control policies followed since a long time. For instance, attention is paid to capital adequacy ratios and loan provisions for countercyclicalities. Custodian of the Two Holy Mosques, Under Your ongoing patronage and follow-up, the Supreme Economic Counsel continued achieving many developmental steps aiming at reconstructing and organizing the economy and updating laws and legislation in order to promote the level of the economy’s efficiency and competitiveness, support the optimum utilization of production factors, and provide sophisticated regulatory and administrative frameworks and an attractive environment to domestic and foreign investments. As a result of these efforts, the economic performance has improved greatly over the recent years. This has been highlighted by the growth of the private sector’s real GDP by an annual average of 5.1 percent during the last five years and the increase in non-oil exports by an average of 14.6 percent during the same period.