Financial Crime World

Banking Regulatory Body Tightens Screws on Financial Institutions

In an effort to maintain financial stability and national economic independence, Mongolia’s Banking Oversight Agency (BOM) has announced stricter regulations for banking activities.

New Guidelines for BOM Examinations

According to new guidelines, BOM will have the discretion to examine materials and information using alternative methods and means that comply with relevant legislation. This includes:

  • Requesting reference and clarification letters from competent authorities such as:
    • Courts
    • Police departments
    • Taxation organizations
    • Financial institutions
  • Co-organizing supervision with these authorities

Bank Licensing Process

During the bank licensing process, the Supervision Department will review documents submitted by founders based on:

  • Articles 18 to 22 of the Banking Law of Mongolia
  • Articles 3.1 and 3.2 of this regulation

The department may conduct on-site examinations for specific issues deemed necessary. If the applicant meets all requirements, the Supervision Department will finalize its conclusion/assessment report in cooperation with other departments and submit it to the BOM’s Board of Directors for approval.

Circumstances for Refusal of Banking License or Ownership Approval

The BOM may refuse to issue a banking license or approve ownership if:

  • National economic independence or stability is threatened
  • Documents do not meet requirements
  • Sufficient proof of paid-in capital cannot be provided

In cases where applications are rejected, founders and shareholders will be notified in writing. The BOM has also introduced a one-year moratorium on accepting new applications from the same applicant.

Licensing of Banking Activities

The BOM grants licenses for banking activities specified in article 6.1 of the Banking Law of Mongolia upon resolution by the governor. Licenses may be granted with restrictions or timing considerations, taking into account:

  • Business plans
  • Organizational structure
  • Other factors

Supervision Department will write records in accompanying documents to bank permissions and approve payment documents that prove state stamp duty and BOM service fees have been paid.

Additional Banking Activities

The article also outlines additional banking activities that can be licensed to banks that meet specific requirements, including:

  • Consistent adherence to prudential ratios
  • A “good” grade in on-site examinations