Banking Supervision Tightens Grip on Non-Compliant Entities

The Mongolian government has introduced new measures to strengthen financial stability and curb regulatory breaches in the national payment system. The revised laws aim to clamp down on entities that fail to comply with banking legislation.

New Requirements for Compliance

• Authorized legal entities providing payment services, settlement agents, contracted agents, banks, and persons providing outsourcing services must transfer relevant documents to competent authorities if a violation of legislation represents a criminal offense.
• Banks found guilty of failing to meet prudential ratio requirements or establish necessary provisions against potential losses on loan repayments will have their dividend payments suspended.

Enhanced Transparency and Accountability

• The Bank of Mongolia has been granted access to equipment and software used in financial operations, as well as the right to make copies of reports, statements, and electronic information related to banking activities.
• This move aims to enhance transparency and ensure that all entities operating within the national payment system are held accountable for their actions.

Protection for Supervisors

• The law provides guarantees to Bank of Mongolia supervisors in performing their duties, including protection from threats, intimidation, and unlawful acts.
• In case a supervisor incurs health damage or loses their life while on duty, they and/or their family members will be eligible for pensions, allowances, and cost reimbursement according to regulations set by the Bank of Mongolia.

New Oversight Measures

• The law introduces new oversight measures for legal entities providing credit information services, including:
  • Examination of complaints related to operations
  • Provision of obligation to correct information
  • Annual review of audit reports

Governance Structure

• The Bank of Mongolia Management will be headed by a Governor appointed by the State Ikh Khural for a six-year term.
• The Governor will be accountable to and report directly to the State Ikh Khural.

Objectives

These new measures aim to strengthen banking supervision and prevent regulatory breaches within the national payment system, ultimately ensuring financial stability and protecting the interests of citizens and stakeholders.