About the FRC

The Financial Regulatory Commission (FRC) is a parliamentary authority for regulation and supervision of the non-bank financial markets.

FRC is Mongolia’s (non-bank) financial markets regulator. It is mandated to supervise and regulate the non-bank financial sector and is responsible for promoting stable and sound financial markets. The FRC exercises power over non-bank financial institutions, insurance companies and intermediaries, securities firms, saving and credit cooperatives, real estate brokers, and dealers of precious metals and stones; ensuring the rights of individual financial market clients (including securities holders, domestic and foreign investors, and insurance policyholders) against financial malpractices.

Established in 2006, the FRC commenced its activities with a greater degree of responsibility than its predecessor; the former Securities Commission. As a regulatory authority formed under parliament, the FRC is accountable to the Mongolian parliament - which oversees its work - and is subject to annual reporting to the parliament’s Economic Standing Committee. Based on statutory objectives, the FRC promotes transparency and fair competition in the non-bank financial sector; in the wider interests of the public, and the financial markets’ clients.

FRC's Mission

Is to develop diversified and sustainable financial markets that ensure the rights of consumers and promote trust in the marketplace; through implementation of sound financial policies and regulation, and the establishment of an effective supervision system.

FRC's Vision

Is to create a diversified, sustainable and inclusive financial system/market where fair competition is promoted and consumer protection is secured; fostering economic growth and development.

FRC's Values

Primarily focus on its workforce; the backbone of the Commission and whose roles are critical in safeguarding the financial well-being of Mongolia’s financial markets’ consumers. FRC’s vital role in regulating and shaping the financial markets require staff to work lawfully and demonstrate high ethical and professional standards in exercising their authority; and for that reason, theFRC values, and strives to embed, the following:

• Accountability
• Independence
• Initiative
• Integrity
• Professionalism
• Teamwork

Regulation

Within its mandate, the FRC monitors activities - of financial markets, clients and institutions that it supervises and regulates -as necessary, to secure compliance with the law. While FRC establishes and enforces prudential standards aimed at ensuring sound financial (and risk) management across all regulated financial institutions, it is committed to ensure the rights of consumers and the 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 risks faced by different firms, measures for managing and mitigating those risks, and the capital adequacy required to withstand unexpected financial loss - thus mitigating the risk of insolvency.

Supervision

Along with its regulatory function, FRC’s core task is to supervise institutions it has authorized to operate in the financial markets. Non-bank financial institutions, insurance companies and intermediaries, securities firms, and saving and credit cooperatives, are all subject to prudential supervision, and monitored on an ongoing basis. Monitoring compliance with statutory obligations and prudential requirements imposed on these institutions is a responsibility the FRC takes very seriously; to ensure the rights of consumers and reduce risks associated with financial malpractice. FRC strives to adopt a risk-based approach when carrying out its supervisory duties, directing its efforts and resources towards areas and institutions of greatest risk to consumers. FRC ultimately strives to align its supervisory approach with the best international and market practices, to maintain high standards in its capacity as a supervisory authority.

Licensing

The FRC authorizes firms and individuals to engage in the non-bank financial sector. In other words, it grants licenses to institutions operating in the markets it supervises, and monitors their 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 them, and reviews their business plans, capital adequacy, necessary resources and systems, and human capacity; for approval, before granting authorization or registering them.

Implementation and enforcement of legislation

The FRC is responsible for the implementation and enforcement of supervisory law, where appropriate. The FRC’s enforcement power is derived from its supervisory mandate, and within the limits of its statutory powers the FRC carries out 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,or otherwise be subject to sanctions. In order to ensure compliance with respective legislation; the Commission monitors activities of supervised entities on an ongoing basis, and works closely with other regulatory bodies and law enforcement. The FRC’s Supervision Department is mainly responsible for monitoring and supervising regulated activities, and identifying cases where enforcement action is necessary. The FRC is able toundertake a range of enforcement measures – including the revoking, termination, and/or suspension of licenses, and issuance of warnings and fines - against firms and individuals that breach the law, and engage in financial malpractice; along with other disciplinary actions to protect consumers and investors.