This means having an effective regime against: •  market misconduct and misdemeanours; and  •  illicit finance, namely money laundering and terrorism financing. MAS is stepping up enforcement action against misconduct such as insider trading, false trading and front running by individuals and traders in the securities market. •  We have sought criminal actions or higher civil penalties to send the right deterrent message. •  In April last year, MAS imposed a civil penalty of close to $ million for insider trading – the highest quantum in a single case so far. BIS central bankers’ speeches  5  When it comes to anti-money laundering and countering the financing of terrorism (AML/CFT), the rules are strict and in line with international standards. Financial institutions must: •  know their customers;  •  assess the risks and perform additional due diligence where the risks are higher;  •  monitor transactions on an ongoing basis and report any suspicious activities. Supervision of financial institutions is rigorous. •  In recent years, MAS has stepped up its onsite supervision of AML/CFT controls – increasing the number of inspections by six-fold. •  This is resource-intensive business: each AML/CFT inspection of a bank takes about 4–8 weeks and involves 4–6 supervisors. We have now set up a dedicated AML Department.
We will: •  make more robust risk assessments of financial institutions’ business activities, client profiles, geographical connections, transaction volumes, and quality of controls;  •  intensify supervision of financial institutions that pose higher risks;  •  conduct thematic inspections of activities that pose higher risk across financial institutions; and  •  step up engagement with financial institutions to promote deeper understanding of emerging risks and typologies as well as best practices to mitigate these risks. But MAS cannot inspect every bank every year. Nor can we go through all transactions. And we certainly do not set out to detect fraud – which would take months of intense scrutiny. Responsibility for AML/CFT rests with the board and senior management of financial institutions. They must: •  put in place robust monitoring mechanisms to detect suspicious activities;  •  promote strong risk awareness and constant vigilance among all staff; and  •  empower their compliance and risk management people. My advice to senior managers in our financial institutions is this: keep your risk and compliance people close to you. •  They are often seen as hindering opportunity and profits. •  But when things go wrong, you wish you had heeded them. •  When they say ‘I think something’s not right here’, listen to them. Ultimately, trust and conduct boil down to culture more than any externally imposed rules. By culture, I mean the shared values, attitudes and norms that guide behaviour. Financial institutions must get the culture right.