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New Law on Banks Grants Governor of National Bank Sweeping Powers to Regulate Financial Institutions
Skopje, Macedonia - The new Law on Banks has introduced significant modifications that grant the governor of the National Bank sweeping powers to regulate financial institutions in the country.
New Measures for Regulation
According to the new law, the governor can take a range of measures against banks, bank groups, or banking authorities, including:
- Issuing recommendations and warnings
- Concluding protocols
- Imposing interdictions
- Limiting certain activities
- Introducing administration
- Withdrawing permits for taking up and pursuing business
Prevention of Money Laundering
The law places great importance on explicit provisions regarding prevention of money laundering. Article 132 gives the governor the right to take corresponding measures in cases where regulations are violated. In cases where a bank is involved in money laundering or other criminal offenses, the governor can withdraw the permit for taking up and pursuing business.
Increased Efficiency
One of the most significant instruments available to the National Bank under the new law is the possibility of pronouncing misdemeanour sanctions without mediation by a court. This increase in efficiency will enable the National Bank to take prompt action to improve conditions in the banking system.
Sentencing of Misdemeanours
The law also provides for the sentencing of misdemeanours to:
- Banks
- Responsible persons
- Legal entities
- Shareholders with qualified participation
- Brokerage houses
- Audit companies
- Individuals connected to banks
Application to Savings Banks and Foreign Banks
All previously listed provisions of the Law on Banks are correspondingly applied to savings banks and branches of foreign banks located in Macedonia.
AML Regulation Strengthens Efforts Against Money Laundering
The Council of the National Bank adopted a decision in July 2009 on the manner and procedure for establishing and applying bank programs for preventing money laundering and financing terrorism. This decision aims to strengthen the efficiency of application of bank programs, particularly in the area of enhanced client due diligence and business relations with high-risk clients.
New Obligations
A new element introduced by the decision is the specifying of obligations regarding the creation of risk profiles based on all relevant information and data about clients and business relationships.
Amendments to Law Strengthen Criteria for Licensing of Fast Money Transfer Providers
In May 2007, amendments to the Law amending the Law on Fast Money Transfer were adopted, strengthening criteria for licensing of providers of fast money transfer. The law specifies cases where the governor can withdraw licenses, including violation of provisions related to preventing money laundering and other proceeds of crime and financing terrorism.
Sentencing Misdemeanour Sanctions
The modifications also provide for the possibility of sentencing misdemeanour sanctions for providers of fast money transfer and responsible persons in case there is no or lack of implementation of a program for prevention of money laundering.
New Decision on Currency Exchange Operations
In February 2009, a new decision was adopted defining conditions, manner, procedure, and documents needed for obtaining licenses for currency exchange operations. The authorized currency exchange entity is obliged to possess a program for preventing money laundering in accordance with regulations defining the prevention of money laundering and financing terrorism.
Guidelines for Implementation
The content of the program has been regulated in guidelines for implementation of the decision on currency exchange operations adopted by the governor of the National Bank in March 2009. If the National Bank identifies that an authorized currency exchange entity does not possess such a program or possesses a program that does not contain all necessary elements, the bank has the right to withdraw the license for currency exchange operations.