National Payment System Faces Legal Violations: Regulatory Measures Implemented

Strengthening Oversight and Enforcement

In an effort to enhance transparency and accountability within the national payment system, regulatory authorities have taken steps to address violations of banking legislation. According to recent amendments to the law, financial institutions operating in connection with payment services, as well as settlement agents, contracted agents, and banks, are required to transfer relevant documents to competent authorities if a violation of the legislation represents a criminal offense.

Increased Powers for the Bank of Mongolia

The Bank of Mongolia has been granted increased powers to access equipment and software used in financial operations, as well as copies of reports, statements, and electronic information related to banking activities. This expanded authority is designed to facilitate more effective supervision and monitoring of financial institutions.

Protection for Supervisors

In recognition of their critical role in regulating the financial sector, supervisors appointed by the Bank of Mongolia have been granted enhanced protection under the law. Specifically:

• They are now shielded from personal liability for losses or damages resulting from a bank’s failure to fulfill its obligations.
• They are protected from harm caused to third parties due to legitimate demands imposed by the supervisor.
• The state has committed to protecting supervisors and their family members from threats, intimidation, and other illegal acts that may affect their lives or health.

In the event of injury or death resulting from official duties, supervisors and their families will be eligible for pensions, allowances, and compensation in accordance with regulations set by the Bank of Mongolia.

Controller Appointed by the Bank of Mongolia

The Bank of Mongolia has also appointed a controller to oversee daily activities of banks and report on these findings to the institution. The controller’s powers include:

• Participating in board meetings without voting rights.
• Providing advice on issues discussed.
• Instructing corrective actions in cases of non-compliance with legislation.

Grounds for Refusal of Supervision

Supervisors and controllers appointed by the Bank of Mongolia have the right to refuse conducting supervision in certain circumstances, including:

• Having worked with a particular financial institution within the previous two years.
• Having relatives who hold managerial positions at that institution.

Supervision over Credit Information Services

The Bank of Mongolia is responsible for overseeing legal entities engaged in credit information services, including:

• Examining complaints related to operations.
• Providing guidance on correcting inaccurate information.
• Conducting annual audits to ensure compliance with regulations.

Bank of Mongolia Management Structure

The Bank of Mongolia is headed by a Governor appointed by the State Ikh Khural, who is accountable to and reports directly to the institution. The Governor serves a six-year term and is responsible for overseeing the daily operations of the bank.

These measures aim to strengthen oversight and enforcement within the national payment system, promoting a more stable and secure financial environment.