- LIU Xiangmin, President – Financial Action Task Force (FATF);
- Mark Billington, Regional Director, ICAEW;
- Colleagues from BRICS Central banks and financial intelligence units;
- Ladies and Gentlemen.
On behalf of the New Development Bank (NDB), I welcome all of you to this conference on fintech and financial regulation organized in collaboration with ICAEW and Shanghai National Accounting Institute.
1. FATF Presidency and our EAG Observer Status
1.1. At the outset, I would like to congratulate Mr. Xiangmin Liu for his recent assumption of the Presidency of the Financial Action Task Force (FATF) for 2019. Thank you Mr. Liu further for accepting our invitation to deliver a key note address and set the tone for the event.
1.2. Mr. Liu, I notice that your assumption of the FATF Presidency comes at an interesting time. It is interesting because, on one hand, fintech applications have the potential for helping achieve sustainable development goals (SDGs) such as smart infrastructure and urban mobility. On the other hand, there have been increasing instances of financial crime vulnerabilities uncovered globally every other day.
1.3. Striking a delicate balance between the need for nurturing these technology innovations and protecting the financial system from vulnerability of criminal abuse, through international standards, in this environment, is a daunting task. I am happy to note that FATF is approaching this task through carefully articulated Priority Areas under the Presidency of Mr. Liu.
1.4. I compliment the FATF for the work done so far in this regard – particularly in the area of recommendations for virtual currencies and ongoing work on digital identity. I am happy to note that the mandate of NDB resonates with the FATF Presidency priority areas in two important contexts – a) leveraging technology for achieving SDGs, and b) safeguarding financial resources, with necessary technology tools, against emerging crimes that can threaten our environment and natural resources.
1.5. NDB started its journey in complimenting the efforts of FATF as an observer at the Eurasian Group on combating Money Laundering. I assure that the Bank continues to collaborate in future with FATF in its global fight against financial crime and money laundering.
2. About NDB
2.1. Let me take this opportunity to give a brief background about NDB and the progress made by it thus far. The setting up of the Bank is a testament of the growing aspirations of developing countries, signified by the BRICS, to stand on their own feet.
2.2. Our core mandate is to finance infrastructure and promote sustainable development projects in our member countries. The Bank strives to be a reliable partner in implementing our member’s development strategies and continuously explore meaningful avenues for contributing towards their commitments under SDGs. Sustainability remains at the core of everything we do.
2.3. Since its inception in 2015, the Bank has made significant progress till today in terms of people, projects, processes and platforms. We have approved 45 projects totaling USD 12.5 billion, spread across in all our member countries. By the end of this year, we aim to end our approval book at about USD 15.0 billion.
3. Access to Capital Markets
3.1. NDB has been financing its projects through regular bond issuances in member countries and international capital markets, including in local currencies. All these issuances are backed by a robust set of financial and risk management policies and systems, making NDB a highly-rated multilateral financial institution internationally.
3.2. As a responsible new player, the Bank is fully committed to the global fight against financial crime and money laundering. Our internal policies and procedures are aligned to the international standards such as those laid down by the FATF and regulatory agencies in the markets we operate in. We believe that our policies and procedures enable us to maintain our stature as a trusted provider of development cooperation services and a financial intermediary that reliably safeguards resources contributed by shareholders and investors.
4. Country systems
4.1. Further, we implement these policies and procedures with the humility to learn from experiences of the member countries that set up the Bank. A relationship of equality, mutual respect and trust between the Bank and member countries will therefore inform all aspects of our operations. We work closely with government authorities, and national development banks, follow nationally-defined laws and procedures on project implementation, wherever applicable.
4.2. It is in this context of country systems that NDB underscores the important work undertaken by the national regulatory agencies, financial intelligence units and professional accounting bodies. It is our firm belief that regulatory policies put in place by national agencies, and control assurances by qualified accounting firms serve as a solid foundation upon which international financial institutions like us could finance infrastructure and sustainable development projects.
4.3. NDB therefore maintains meaningful cooperation and dialogue with the member country central banking & regulatory community on an ongoing basis. Ultimately, the goal is to contribute, through projects and by other means, to knowledge sharing among the member countries, thus establishing NDB as a platform for South-South cooperation.
5. NDB International Conference on Fintech & Financial Regulation
5.1. The UN SDGs explicitly recognize the role of technology in promoting clean environment, building up cities with smart urban mobility and providing financial access through digital ids. This Conference contributes to this global agenda from multiple contexts – our role as a responsible capital market player, our firm commitment to the global fight against financial crime, and our commitment to providing platforms for knowledge dissemination across our member country stakeholders.
5.2. NDB firmly believes in the role of technology as a force multiplier for promoting sustainable development. The Strategy of NDB therefore encourages application of speed and technology in everything the Bank does to finance sustainable development.
5.3. Sustainable development of technology underscores a nimble regulatory architecture that strikes a right balance between fostering fintech innovation through regulation and tackling fintech crimes through supervision. The proliferation of these innovations, the pace at which they are emerging, and the sophistication of their applications however makes this “nimbleness” an easier stated aspiration than done.
5.4. Against this background, tech-knowledge dissemination platforms like these jointly organized by the Bank will provide opportunities for regulators, financial intelligence units, international organizations, professional bodies and financial industry participants to learn from each other and contribute to the development of a safe and sound fintech eco-system required for sustainable development.
5.5. However, as more and more technology innovations are introduced, the threat of disruptions to existing systems from financial crime vulnerabilities continue to occur. They continue to raise debates regarding the appropriate AML frameworks to be put in place by the regulators and the IT audits by the professional firms.
5.6. The present environment will thus present multiple challenges and opportunities. While FATF contributes towards developing international standards for tackling these challenges, NDB will leverage such standards to expand its financing opportunities for infrastructure and sustainable development.
6. Concluding remarks
6.1. I am grateful to Mr. Liu Xiangmin and Mr. Mark Billington for joining us today and wish the joint conference a grand success.