The FRC is one of Mongolia’s two financial regulators: mandated to supervise and regulate the non-bank sector; including the insurance and securities markets, and participants of the microfinance sector. The FRC is responsible for providing for stable and sound financial markets. The Commission exercises power over non-bank financial institutions, insurance companies and intermediaries, securities firms, and savings and credit cooperatives. At the same time, ensuring the rights of individual financial market clients (securities holders, domestic and foreign investors, and insurance policyholders) and protecting against financial malpractices.
Established in 2006, the FRC commenced activities with a greater degree of responsibility than its predecessor institution; the former, Securities Commission. As a supervisory authority formed under parliament, the FRC is accountable to the Mongolian parliament (overseeing its work) and is subject to annual reporting to the Economic Standing Committee. Based on statutory objectives and tasks the ‘FRC promotes transparency and fair competition in the non-bank financial sector towards the greater interest of the public and financial market clients’.
To create a diversified, sustainable and inclusive financial system/market where fair competition is promoted and consumer protection is secured towards fostering economic growth and development.
To develop diversified and sustainable financial markets that ensure the rights of consumers, and trust, in the marketplace; through implementation of sound financial policies, regulation, and the establishment of an effective supervision system.
The FRC monitors activities of the clients and institutions - in the financial markets it supervises - and regulates, when necessary, to secure compliance with the law. While FRC establishes and enforces prudential standards - to ensure sound financial and risk management across all relevant institutions - it is committed to ensure the rights of consumers, and proper functioning of financial markets. The framework of prudential standards and requirements provides necessary guidance in relation to any financial activity regulated by the FRC. The framework also addresses: risks faced by firms (with measures for managing and mitigating them) and the capital adequacy required to withstand unexpected financial loss (thus mitigating the risk of insolvency).
Along with its regulatory function, another of FRC’s core tasks is to supervise institutions it regulates and authorized to operate in the financial markets. Non-bank financial institutions, insurance companies and intermediaries, securities firms, and savings and credit cooperatives are all subject to prudential supervision, and monitored in an ongoing basis. Monitoring compliance with statutory obligations and prudential requirements imposed on institutions, is a responsibility FRC takes very seriously; to ensure the rights of consumers and manage risks associated with financial malpractice. FRC adopts a risk-based approach when carrying out its supervisory duties. The Commission directs efforts and resources towards areas and institutions - of greatest risk to consumers, and proper functioning- of the financial markets. FRC strives to align its supervisory approach with best international and market practices, to maintain high standards in its capacity as a supervisory authority.
FRC is responsible for the implementation and enforcement of relevant supervisory law. The Commission’s enforcement powers are derived from its supervisory mandate. Within the limits of its statutory powers, the FRC undertakes on-site and off-site inspections, and issues sanctions where necessary. It is imperative for firms and individuals - who undertake regulated activities - to comply with respective rules and legislation; otherwise they will be subject to sanctions. To ensure compliance with respective legislation, the FRC monitors activities of supervised entities on an ongoing basis, and works closely with other regulating bodies, and law enforcement. The Commission’s Supervision Department is mainly responsible for monitoring and supervising regulated activities, and identifying cases where enforcement action is necessary. The FRC has a range of enforcement measures - revocation, termination, suspension of licenses, issuance of warnings and fines – for firms and individuals that breach the law and/or engage in financial malpractice.
The FRC authorizes firms and individuals engaged in the non-bank financial sector. For example, the Commission grants licenses to institutions operating in the markets it supervises, and monitors compliance with statutory regulations and licensing requirements. It is vital that firms and individuals offering financial services (regulated by the FRC) operate in the best interests of consumers and meet the prudential requirements set by the FRC. The FRC imposes a range of requirements upon firms, and reviews items such as: business plans, capital adequacy, necessary resources and systems, and human capacity; for approval before granting authorization or registration.