The Financial Regulatory Commission (FRC) is a partner agency of the World Bank-funded Strengthening Fiscal and Financial Stability Project (SFFSP). The Commission is a beneficiary of the project's C4 sub-component: Strengthening Institutional Capacity of the FRC.
The core objectives are:
1. Support in drafting regulatory legislation for the non-bank financial sector;
2. Review of the current legal environment of the non-bank financial sector, securities and insurance markets, NBFIs, and credit cooperatives; and
3. Capacity building of the FRC's supervisors (inspectors);
The first objective relates to identifying issues faced in the non-bank financial sector's legal status and incorporating recommendations and feedback from national consultants. Within the framework of the implementation of the General Directives for Improving Legislation of Mongolia by 2020 (Resolution #11 of the Parliament of Mongolia, 2017), the consultants conducted activities that included identifying the laws and legal acts (regulations) that need to be revised and amended. For example, the consultants drafted amendments to the Law on Legal Status of the FRC and reviewed and identified problems in implementing and enforcing the non-bank financial sector legislation. i.e., Law on Real Name Financial Transaction, Crowdfunding Scheme, Law on Securities Market, Draft Law on Compulsory Insurance Duties of Staff Members of Medical Organizations, Draft Law on Credit and Savings Cooperatives, precious metals legislation, and the Law on the Agricultural Commodity Exchange besides, some current rules and regulations of the FRC were developed and revised by the consultants.
Concerning the second objective, the Law of Securities, the Law of Insurance, the Law on Non-Bank Financial Institutions, the Law on Savings and Credit Cooperatives, and other legislative provisions regulating the Commission's regulated markets are all being evaluated and improved. For example, the ICP-16 – Enterprise Risk Management for Solvency Purposes has been incorporated into relevant rules and regulations, with an international consultant's assistance. It was part of the phased implementation of 26 Insurance Core Principles established by the International Association of Insurance Supervisors. The Commission's Insurance Market Department is developing a draft regulation on the Own Risk and Solvency Assessment (ORSA) performance based on a consultant's recommendations.
Under the third objective, supervisors and inspectors of the FRC's Supervision Department were provided with professionals' training (on skills improvement), and a guideline for supervisors' inspections was published. As a result, the effectiveness of supervision has been enhanced - due to the advancement of supervisors' skills in legislation enforcement and analysis of financial institutions' activities - particularly those among those supervisors associated with securities and insurance underwriters, dealers, and brokers.
Risk-based methodologies are being adopted into the FRC's supervision of regulated entities' activities, and relevant training, guidelines, and recommendations have been provided (with print-outs) for use by the supervisors concerned. There have been significant impacts, such as the FRC's enhanced role in anti-money laundering regimes. The Commission has successfully improved those activities' effectiveness (stated in the Action Plan and agreed with FATF) that fell under the FRC's oversight. Accordingly, Mongolia has been removed from the list of countries with strategic deficiencies in their anti-money laundering regimes.
Moreover, supervisors attended professional English language courses, and their language skills have duly improved. It provides more competent staff, performs their duties better, and participates more effectively in international relations and training.
WORLD BANK WORKING GROUP MET WITH PIU AND IMPLEMENTING ORGANIZATIONS REGARDING THE COMPLETION REPORT OF THE STRENGTHENING GOVERNANCE IN MONGOLIA PROJECT
Concerning the Strengthening Governance in Mongolia project, which was completed on February 28, 2023, the World Bank working group to develop the project completion report had an official meeting with Project Implementation Unit (PIU) and implementing organizations on March 30, 2023. The purpose of the working group meeting is to review the implementation of the project, the results achieved, and the fulfillment of the project indicators.
PERFORMANCE BASED FINANCING: INSPIRING NEW APPROACHES TO PUBLIC FINANCIAL MANAGEMENT IN HEALTH AND EDUCATION
Performance based financing (PBF) links funds or payments to service providers to results achieved and gives them considerable autonomy in the use of these funds. The strategic approach is appealing to many individuals and organizations as it motivates them to perform better and channels resources directly to the frontlines. This in turn fosters greater accountability. Using this approach has been popular in different sectors with some promising results emerging.
AN INTEGRATED SYSTEM FOR RESULTS-BASED MEDIUM-TERM BUDGET PLANNING: IN ACHIEVING THE GOALS OF IMPROVING BUDGET PLANNING, BUDGET EFFICIENCY AND PROGRAM OUTCOME.
Under the scope of improving public financial management, Mongolia is aiming to introduce result-oriented medium-term budgeting, transitioning from the traditional input-based budgeting. This goal is aligned with development policy of Mongolia to shift from medium-term fiscal framework (MTFF) to medium-term expenditure framework (MTEF).
The MOF is entering the new phase of PFM Reform Action Plan
Within the framework of the European Union financed, World Bank managed “Strengthening Governance in Mongolia” project, the Ministry of Finance, in compliance with the “Sustainable Development Vision 2030” and the “Action Program of the Government of Mongolia for 2016-2020”, has approved and implemented the Public Financial Management (PFM) Reform Strategy and the Action Plan for 2018-2022. The overarching objective of the strategy was to improve governance and achieve effective resource allocation and efficient public service delivery. The implementation status of the PFM Action Plan is indicated as “Certain results have been achieved” at the rate of 85 percent.
LAUNCHED BETA VERSION OF THE REDEVELOPED GLASS ACCOUNT PORTAL
The Ministry of Finance Mongolia has developed and successfully launched the new version of the Glass Account Portal in 2023 within the framework of the Strengthening Governance in Mongolia Project jointly implemented by the EU and the World bank.
New systems and services are added in the Intermediate service platform for fiscal and financial systems
The Ministry of Finance Mongolia has developed and successfully launched the Intermediate Service Platform (ISP) in 2022 within the framework of the Strengthening Governance in Mongolia Project. The main purpose of the system is to provide a possibility of information /web services/ exchange between the independent systems of the Ministry of Finance and other organizations in a easy and flexible way. In addition, it is solving the issues of overlapping connections and development between many information systems and organizations, transferring them to a unified standard, making it has no complexity, and more secure.