Financial Crime World

Mongolia’s Financial Regulatory Commission: Protecting Consumers and Investors in the Non-Bank Sector

The Financial Regulatory Commission (FRC) of Mongolia has played a pivotal role in maintaining the stability and integrity of the country’s financial markets since its inception in 2006. As one of Mongolia’s two financial regulators, the FRC is responsible for supervising and regulating the non-bank sector, which encompasses various industries like insurance and securities markets, real estate, precious metals and stones dealers, and microfinance.

Mandate and Functions

The Financial Regulatory Commission’s duties include:

  1. Regulating and supervising non-bank financial institutions (NBFIs), insurance companies and intermediaries, securities firms, and saving and credit cooperatives (SCCs)
  2. Protecting individual financial market clients — securities holders, domestic and foreign investors, and insurance policyholders — from financial malpractices
  3. Ensuring financial institutions meet prudential requirements and serve the public interest
  4. Aligning regulatory approach with international best practices

Core Functions and Licensing

The Financial Regulatory Commission’s functions include:

  • Regulation
  • Supervision
  • Teamwork
  • Professionalism
  • Initiative
  • Independence
  • Accountability
  • Integrity
  • Implementation and enforcement of legislation

Applicants seeking authorization in the non-bank financial sector must meet specific requirements, such as:

  • Submitting a sound business plan
  • Having sufficient capital adequacy
  • Possessing the necessary resources and systems

The FRC’s thorough review process ensures that institutions only granted authorization can effectively serve the public and meet prudential requirements.

Regulated Entities

Entities regulated by the FRC include:

  • Payment and guarantee service providers
  • Factoring services
  • Custodian banks
  • Investment consultants and management
  • Underwriters
  • Reinsurance companies
  • SCCs
  • Foreign exchange companies
  • Investment and financial consultancies
  • Brokers and dealers
  • Stock exchanges
  • Loan services

continuous monitoring and Enforcement actions

To ensure all regulated entities comply with respective rules and regulations, the FRC conducts continuous monitoring and adheres to a strict disciplinary framework when violations or financial malpractice occur. Disciplinary actions may include:

  • Warnings
  • Fines
  • Suspension or termination/revocation of licenses

These measures aim to protect consumers and investors and uphold the FRC’s vision of a diversified, sustainable, and inclusive financial market.

The FRC’s Organizational Structure

The FRC’s organizational structure includes various departments like:

  • Secretariat
  • Accounting Unit
  • Corporate Governance and Compliance Division
  • NBFI Department
  • Information Technology Division
  • Supervision Department

These departments combine their efforts to ensure effective implementation and enforcement of financial sector legislation throughout Mongolia.