KUALA LUMPUR: Bank Negara Malaysia is developing the regulatory structure for digital currencies and from 2018, persons converting crypto currencies into fiat money currencies will come under anti-money laundering law.Bank Negara Governor Tan Sri Muhammad Ibrahim said on Wednesday these persons would be designated as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 ( AML/CFT framework).“This is to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system,” he said at the Third Counter-Terrorism Financing Summit 2017 – “Powering Regional Solutions Through Strengthened Alliances and Innovations”.In his keynote address, “Readying the Financial Sector Amid the Evolving War on Terrorism Financing”, he said the regulators must prepare themselves as digital currencies will become the new norm.Muhammad said the advent of digital currencies as some have forecast, will mark the beginning of a new era in the financial sector.He pointed out the use of artificial intelligence and big data will have the potential to increase efficiency and accuracy of assessments that is essential in a dynamic environment.The banking sector needs to adopt the latest and most advanced technologies to improve its risk management framework, he said.Muhammad suggested a three-pronged strategy to erect stronger defences within the financial system.“This will include capitalising on technology, promoting clever partnership between the authorities and industry, and closer international cooperation,” he said.He pointed out while technological misuse poses a danger to society’s wellbeing, technology is also an effective tool to counter terrorism financing.“We must harness the vast potential in technological innovations to reinvent and reinforce our lines of defence,” he said.He said the reliance on automated systems to monitor and detect suspicious transactions have served well, but more needs to be done.“We need new tools. The adoption of artificial intelligence, machine learning, and big data technology are tools that would likely be imperative, as suspicious transactions become more complex and harder to detect,” he said.He added the banking sector needs to adopt the latest and most advanced technologies to improve its risk management framework.“Dynamic collaboration between the public and private sector is imperative to create an environment conducive for the creation of innovative solutions,” he added.Greater access of intelligence information for financial institutions and the increased threats from ISIL had resulted in the upward trend of reporting of Suspicious Transaction Reports (STRs).“To put it in perspective, in 2015, the financial intelligent unit (FIU) received 93 terrorism financing related STRs which led to 14 disclosures to law enforcement agencies.“In comparison, between January and June 2017, we received 346 terrorism financing related STRs which have led to 34 disclosures to law enforcement agencies. Importantly, the quality of STRs submitted has also improved,” he said.Muhammad said Bank Negara was in the midst of finalising the details of a new requirement for the Banking and Money Services Business sector to report remittances in high risk areas.The high risk areas will be determined based on the law enforcement agency’s intelligence on areas that they view may pose higher risks for funding of terrorism activities.He pointed out another area to ensure an effective mitigating strategy requires closer regional and global cooperation, particularly in the sharing of intelligence and technical know-how.Terrorism and terrorism financing are global issues that demand global solutions. Sharing of intelligence and expertise across borders will go a long way towards enhancing the effectiveness of our risk management framework.“In this regard, the various working groups under the CTF Summits, the Financial Intelligence Consultative Group and International Community of Experts have done commendable efforts and initiatives in building capacity and sharing operational experiences in the region. This must continue to be strengthened given the challenges that we will face,” he added.