Regulatory Compliance for Fintech Companies in Mongolia: Key Takeaways and Guidelines
The Mongolian financial sector is undergoing significant changes, with a growing emphasis on regulatory compliance for fintech companies. In this article, we will discuss the key takeaways and guidelines for fintech companies to navigate the complex regulatory landscape in Mongolia.
New Laws and Regulations Create Opportunities for Fintech Companies
The country’s banking sector is dominated by five strategically important banks, which account for about 90% of the financing. However, the introduction of new laws and regulations has created opportunities for fintech companies to enter the market.
Key Legislation
- Banking Law Amendment (2021): Commercial banks must cap shareholding limits at 20% per shareholder, either alone or jointly with related parties.
- Investment Banking Law (2023): Sets out the regulatory framework for investment banks in Mongolia, allowing them to provide mid- or long-term financing through various activities.
Regulatory Framework for Fintech Companies
To ensure regulatory compliance, fintech companies must meet requirements set forth in the Investment Banking Law and detailed secondary regulations approved by regulators. This includes:
Licensing Requirements
- Obtain necessary licenses and approvals from Mongol Bank and the Financial Regulatory Commission (FRC).
- Foreign banks can open subsidiaries in Mongolia to operate investment banking activities, subject to licensing requirements.
Key Provisions for Fintech Companies
The Investment Banking Law has several key provisions that fintech companies must comply with:
Restrictions on Activities
- Investment banks are prohibited from operating for any purpose other than investment.
- They cannot purchase shares of other banks and financial institutions in Mongolia, take deposits, offer interest-bearing accounts, or source funds through similar means.
Conclusion
The Mongolian government is taking steps to create a favorable environment for fintech companies, while ensuring that they comply with regulatory requirements. By understanding these guidelines, fintech companies can navigate the complex regulatory landscape and take advantage of opportunities in this growing market.