The Financial Regulatory Commission

The Financial Regulatory Commission (FRC) of Mongolia, a statutory body, was set up under the Law on Legal Status of the Financial Regulatory Commission on January 25, 2006 with the appointment of its chairman and commissioners by the Parliament. More than 1000 legal entities such as legal entities participating on the securities market, commercial insurance organizations, non-bank financial institutions, and savings and credit cooperatives are regulated by the FRC.

Mission

We aim to ensure nation’s financial market stability.
The Commission is organized into the following operational units:

The Financial Reporting, Auditing and Valuation, Assessment Quality Control Department is responsible for:
• Examining the quality of financial statements of regulated entities, accuracy of the publically disseminated information,
• Assessing the quality of audit and valuation performance and
• Ensuring compliance with relevant legislations with the purpose of providing financial stability in the market as well as to protect the interest of consumers, investors and the market participants.

The Administration Department is responsible for:
• Ensuring compliance with the decrees and resolutions of the Commission by staff through enforcement activities;
• Conducting public affairs and information dissemination;
• Administering human resource, budget and financial management;
• Maintaining good working environment.

The Securities Market Department is responsible for:
• Formulating proposals to improve the legal environment of the Securities Market
• Developing rules, criteria, procedures, regulation, methodology, and recommendations within the aim of providing stability of the securities market.
• Creating competition and building credibility in the securities market and developing and implementing policy to introduce corporate governance principles.
• Developing proposals and maintaining records on granting, suspending and revoking licenses to carry out activities on the securities market
• Obtaining financial statements of licensees and regulated entities, conducting analysis and indentifying the risks, taking preventive measures and taking legal actions when risk occurs and maintaining their records.
• Conducting and organizing trainings for professional participants of the market with the purpose of enhancing the public financial education.
• Take measures on developing accounting standards of license holders consistent with international accounting standards.
• Carrying out financial analysis on the industry, identifying the risks and providing consolidated statistics.
• Establishing information and research database on securities market regulation and on its development.
• Developing proposals on determining regulatory service fee amount for licensed financial market participants.
• Conduct examination on the accuracy of the accounting and financial statements of the regulated entities and carry out off-site supervision and reinforce financial conducts.
• Monitor the compliance of all activities in relation to securities market such as overseeing the market, issuing IPO, securities transactions and trading of securities with relevant laws and rules.
• Conduct inspections on activities of license holders and examine whether the license requirements and conditions are met.
• Developing on-site inspection strategy and coordinate the related activities.
• Developing and improving standards for supervision and ensure their implementation.
• Provide state inspectors with guidelines and other documents and create a working environment for inspectors to fulfill their duties within the legal framework.
• Monitor structure of the internal control of the regulated entities and introduce corporate governance to Mongolian companies.
• Solve disputes among license holders and disputes between license holders and clients within its power.
• Keeping a record of administrative cases if necessary to inform the cases to the court and the relevant police office.
• Representing the Commission at the criminal and civil courts, and arbitrages.
• Protecting the legal interest of the investors and shareholders.
• Monitoring the status of announcements, statements and other information disclosed by the regulated entities in accordance with relevant laws.
• Cooperating with foreign counterpart organizations in line with international standards.

The Insurance Market Department is responsible for:
• Formulating proposals to improve the legal environment of the Securities Market
• Developing rules, criteria, procedures, regulation, methodology, and recommendations with in the scope of its power and ensure the implementation with the aim of providing stability of the financial market.
• Creating competition and establish trust in the Insurance Market and develop and implementing policy to introduce corporate governance principles.
• Developing proposals and maintain records on granting licenses to carry out financial activities and suspension, revocation and termination.
• Obtaining financial statements of licensees and regulated entities, conducting analysis and indentifying the risks, taking preventive measures and take legal actions when risk occurred and maintaining their records.
• Conducting and organizing trainings for professional participants of the market with the purpose of enhancing the public financial education.
• Taking measures on developing accounting standards of license holders consistent with international accounting standards.
• Carrying out financial analysis on the industry, identify risks and provide statistics.
• Enhancing the public financial education and to organize training that aimed at market intermediaries In accordance with the duties and responsibilities, to.
• Developing proposals on determining regulatory service fee amount for licensed financial market participants.
• Conducting examination on the accuracy of the accounting and financial statements of the regulated entities and carry out off-site supervision and reinforce financial conducts.
• Conducting inspections on activities of license holders and examine whether the license requirements and conditions are met.
• Developing on-site inspection strategy and coordinate the related activities.
• Developing and improving standards for supervision and ensure their implementation.
• Providing State Inspectors guidelines and other documents and creating a working environment for inspectors to fulfill their duties within the legal framework.
• Monitoring structure of the internal control of the regulated entities and introducing corporate governance to Mongolian companies.
• Solving disputes among license holders and disputes between license holders and clients within its power.
• Representinh the Commission at the criminal and civil courts, and arbitrages.
• Protecting the legal the interest of the investors and shareholders.
• Monitorinh the status of announcements, statements and other information disclosed by the regulated entities in accordance with relevant laws.
• Cooperating with foreign counterpart organizations and follow international.

The Microfinance Department is responsible for:
• Formulating proposals to improve the legal environment of Non-bank financial activities, Savings and Credit Cooperatives and Currency Exchange Units.
• Developing rules, criteria, procedures, regulation, methodology, and recommendations with in the scope of its power and ensure the implementation with the aim of providing stability of the NBFIs SCC and CEU.
• Creating competition and establish trust in the NBFI, SCC and CEU and develop and Implement policy to introduce corporate governance principles.
• Developing proposals and maintaining records on granting, suspending, revoking and terminating the licenses to carry out activities on NBFI, SCC and CEU.
• Obtaining financial statements of licensees and regulated entities, conduct analysis and indentify the risks, take preventive measures and take legal actions when risk occurred and maintain their records.
• Conducting and organizing trainings for professional participants of the market with the purpose of enhancing the public financial education.
• Taking measures on developing accounting standards of license holders consistent with international accounting standards.
• Carrying out financial analysis on the industry, identify risks and provide statistics
• Enhancing the public financial education and to organize training that aimed at market intermediaries.
• Developing proposals on determining regulatory service fee amount for licensed financial market participants.
• Conducting examination on the accuracy of the accounting and financial statements of the regulated entities and carry out off-site supervision and reinforcing financial conducts.
• Conducting inspections on activities of license holders and examine whether the license requirements and conditions are met.
• Developing on-site inspection strategy and coordinate the related activities.
• Developing and improving standards for supervision and ensure their implementation
• Providing state inspectors guidelines and other documents and create a working environment for inspectors to fulfill their duties within the legal framework.
• Solving disputes among license holders and disputes between license holders and clients within its power.
• Representing the Commission at the criminal and civil courts, and arbitrages.
• Protecting the legal the interest of the investors and shareholders
• Cooperating with foreign counterpart organizations and follow international

The Legal Division is responsible for:
• Providing the Commission, its Supervisory board and Commission officers with legal advices and recommendations;
• Investigating the Commission legal acts and the penalties imposed by inspectors are in consistent with the law
• Representing the Commission at criminal and civil courts, and arbitrages.

The International Cooperation Division is responsible for:
• Developing project proposals and presenting to foreign and international organizations for further assistance
• Translating the Commission’s annual report, introduction and other relevant documents.
• Establishing mechanisms to promote cooperation with foreign and international organizations in relation to the development and regulation of the marketplace by the Commission.
• Maintaining of the English website of the Commission
• Assisting in the application of projects implemented by the support of international donor organizations and investors.

Internal Control Unit is responsible for:
• Supervising implementation of decrees, action plans, and decisions adopted by the Commission;
• Monitoring the compliance of Commission office’s operation with requirements and take corrective actions when violations occur;
• Monitoring the financial activities and budget functions of the Commission.

The Commission is comprised of the Chairman and six members appointed by the Parliament. The Chairman of the commission is nominated by the chairman of Parliament. The Standing Committee on Economics nominate two members, and the Standing Committees on Budget and Law, the Governor of the Bank of Mongolia, and Cabinet member in charge of the financial matters each shall nominate one member. The Chairman and members proposed by the Standing Committees on Economics and Law are full time members; and the remaining four members are non-staff members of the Committee. The term of office for the Chairman and members shall be five years and may be extended only for one period.

Principles of the Commission Activities

The Commission activity is based on the principles of independence, transparency, and non-partisanship, ensuring the stability of financial markets, and protection of public rights and legal interests.

The powers of the Commission include:

• to undertake activities to enforce legislation related to financial services and monitor their implementation;
• to approve rules, procedures, and guidance within its authority, monitor their implementation, and define necessary criteria and other standards to support the stability of the financial market;
• to grant licenses for carrying out financial services (hereinafter referred as to “license”), suspend, revoke, terminate it, and monitor the implementation of license requirements;
• to monitor the activities of license holders;
• to define the regulatory fees to be imposed on license holders;
• to solve disputes among the license holders and/or between license holder and client within its powers;
• to approve the ethical codes of the Commission’s employees and monitor the compliance with it.

Additional powers of the Commission are:

• on non-bank financial activities defined in the Law on Non-bank Financial Activities;
• on activities related to the participants of the securities markets defined in the Law on Securities;
• on insurance activities defined in the Law on Insurance;
• on activities related to the professionals in insurance defined in the Law on Professional Insurers;
• on savings and loan activities defined in the Law on the Cooperatives