FRC to penalize unauthorized foreign exchange traders

The Financial Regulatory Commission has completed an inspection of the local foreign exchange market, centralized at the Naiman Sharga Currency Exchange Center.

Conducted with the Chingeltei District Police Department, the inspection was conducted to monitor implementation of the Law on Combating Money Laundering and Financing of Terrorism and the legality of the activities of non-banking financial institutions licensed to conduct foreign exchange trading, as well as stop operations of unlicensed foreign exchange traders. Through the inspection, the authorities imposed penalties to four people who were exchanging national currencies against other currencies without a license and gave them a warning. For the same offense, a company has been sued and an infringement case has been started under a prosecutor.

“The Financial Regulatory Commission will continue to focus on cracking down on unlicensed foreign exchange traders, and the public involvement is important to achieving this. Therefore, we requested the public to cooperate with the commission by informing us about complaints and information related to currency trading violations,” the commission advised.

The authorities warned people not to buy or sell foreign currencies from traders on the streets as they are likely unlicensed to engage in such activity. They explained that this increases risks of obtaining counterfeit money and indirectly supports illegal activities. Currency traders, on the other hand, are advised to verify information of customers by scanning their fingerprints, and provide receipts that can be input on the ebarimt system.

The commission approved the Procedures on Regulating and Supervising Foreign Exchange Trading Activities of Non-Banking Financial Institutions in June to set standards in the foreign exchange market. This was also directed to address some of the deficiencies in the anti-money laundering and counter terrorism financing regime of Mongolia that were identified by the Financial Action Task Force. With stricter regulation, the authorities expect non-banking financial institutions to improve financial discipline, properly report on their income and expenses, and prevent potential risks.

Presently, 154 non-banking financial institutions are licensed to engage in this service and can access the national KHUR information system to verify information of customers. These institutions are also obligated to issue receipts for all currency trade.