Compliance Regulations in Banking in Moldova, Republic of
The banking sector in Moldova’s financial system is comprised of two levels: the National Bank of Moldova and commercial banks. The National Bank operates under the Law on the National Bank of Moldova, which outlines its jurisdiction, primary objectives, basic tasks, and relations with financial institutions. Additionally, the Law on Financial Institutions serves as the foundation for governing the activities of financial institutions, including banks.
Regulatory Framework
The National Bank of Moldova has established a surveillance and regulating mechanism for banking activity by setting specific requirements outlined in its normative acts. These requirements are constantly refined to align with legal provisions, international principles, and best practices, including recommendations from the Basel Committee on Banking Supervision and European Union Directives.
Key Requirements
- Criteria for bank authorization
- Capital requirements
- Expectations towards owners and administrators
- Standards for ensuring high-quality internal control systems, including procedures to prevent and combat money laundering
Prudential Supervision
The National Bank of Moldova exercises prudential supervision to limit banks’ exposure to risk and takes action to address problems within vulnerable banks through corrective measures, sanctions, special surveillance, or special administration when necessary.
Objectives
- Ensure a smooth financial system in Moldova
- Promote a strong and competitive banking sector oriented towards market relations and risk prevention
Supervision Methods
The National Bank of Moldova performs both off-site and on-site supervision of banks according to its powers and rights conferred by legislation.
Off-Site Supervision
- Monitoring and analyzing banks’ financial situations between on-site inspections
- Identifying potential risks and problems early, allowing for prompt implementation of necessary measures
- Conducted based on reports submitted by banks, external audit information, and regular and thematic inspections
On-Site Inspections
- Assessing the level of risk within each bank
- Evaluating management’s capabilities to effectively control and manage this risk
- Each bank undergoes an annual inspection during which the National Bank determines its overall financial situation, causes, and factors affecting its safety
Linkages between Off-Site and On-Site Supervision
On-site supervision is closely linked with off-site supervision, as information gathered during off-site inspections informs the purpose and objectives of on-site inspections.