Financial Crime World

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SWAZILAND: Regulatory Requirements for Financial Institutions Take Center Stage

In an effort to ensure financial stability, integrity, and protection of financial services consumers in Swaziland, the Financial Regulation department (FRD) plays a crucial role in regulating and supervising banks and other financial institutions. The FRD derives its mandate from various pieces of legislation, including:

  • Central Bank Order, 1974
  • Financial Institutions Act of 2005
  • Exchange Control Order of 1974
  • Money Laundering and Terrorism Financing (Prevention) Act of 2011

FRD Functions

The FRD is divided into four main functions:

Banking Supervision Division

  • Oversees banks to ensure adherence to prudential standards, including:
    • Capital adequacy
    • Asset quality
    • Risk management
    • Liquidity
    • Stress testing
  • Employ both onsite and offsite approaches to banking supervision

Financial Surveillance Division

  • Monitors exchange controls
  • Ensures the integrity of the financial system
  • Licenses Authorized Dealers with Limited Authority (ADLAs)
  • Adopted a post-monitoring approach, allowing ADLAs more independence in processing foreign currency transactions
  • Aims to improve the ease of doing business in Swaziland

Policy & Enforcement Division

  • Formulates and develops financial policies for sector institutions
  • Reviews and updates the regulatory framework
  • Implements enforcement actions on regulated institutions
  • Responsible for reviewing and analyzing license applications

Market Conduct & Consumer Protection Unit

  • Ensures that banks and other financial services providers comply with market conduct-related policies and practices
  • Includes public awareness and financial education initiatives to promote consumer protection and fair treatment of consumers

Financial Stability Unit

  • Assesses systemic risk in the system, working closely with other stakeholders
  • Collects and analyzes data, identifying vulnerabilities in the financial system
  • Disseminates findings through the annual Financial Stability Report (FSR)

Conclusion

In a statement, the FRD emphasized the importance of regulatory requirements for financial institutions, stating that they are critical to ensuring financial stability, integrity, and protection of financial services consumers. The department values its people and respects the public-good mandate bestowed on it, working tirelessly to promote a robust and resilient financial system in Swaziland.