Such assessments are usually allocated according to each member’s contribution to the CCP’s default fund. This way of allocating assessments, provided it is transparent, gives members a degree of predictability about what will happen. Nevertheless, they could expose surviving clearing members to sudden and very large liquidity demands which they would have to source in the market, and could thus have strong contagion effects14 – even pushing members to close out their contracts and leave the CCP, rather than face the spiralling costs of remaining a member. For these reasons, such tools may prove problematic for bank supervisors. Another tool which is frequently mentioned in discussions on CCP recovery is variation margin gains haircutting (VMGH). In my view, this tool may have a certain advantage over ex post cash calls, in the sense that it would alleviate the need for members to raise extra  12  While central clearing protects banks against idiosyncratic risk, it can reduce their incentives to protect themselves from non-diversifiable shocks, hence the need for regulation to provide a strong incentive framework. For a theoretical discussion, see Biais, B., Heider, F., and Hoerova, M., “Clearing, counterparty risk and aggregate risk”, European Central Bank, October 2011. 13  For a discussion of loss-allocation rules, see also Elliott, D., “Central counterparty loss-allocation rules”, Bank of England, Financial Stability Paper, No. 20, April 2013. 14  See Heath, A., et al. (2015, op. cit.) for a simulation of the impact of different loss allocation mechanisms.
Fahad Bin Abdullah Al-Mubarak: Combatting money laundering and terrorism financing Speech by H E Dr Fahad Bin Abdullah Al-Mubarak, Governor of the Saudi Arabian Monetary Agency and Chairman of Anti-Money Laundering Permanent Committee, to the 51th Plenary Meeting of Middle East & North Africa Financial Action Task Force (MENAFATF), Jeddah, 28 April 2012. *  *  *  Ladies and Gentlemen, I am pleased to welcome you in the Kingdom of Saudi Arabia. It also gives me pleasure to meet you all in this important regional meeting which is the 51th Meeting of MENAFATF. The meeting encompasses many essential and important issues of common interest and ways that would, in turn, promote cooperation to better levels. All peoples count on the unique role played by your Task Force to protect countries of this region against repercussions of money laundering and financing terrorism crimes. I wish your meeting all success and wish you all a good stay in Jeddah. Dear Audience, Increasing attention has been paid to anti-money laundering and counter-terrorism financing systems over the past years. This has been due to the great progress witnessed in financial and banking systems, diversity of communication means, simplicity of money movement and advanced payment systems. However, the speed factor in conducting commercial transactions, existence of indirect financial operations and unreal existence of dealers have led to great risks. Some of these risks are: potential abuse of these developments in performing illegal objectives.