Banking regulation and supervision

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The banking sector of the Republic of Moldova consists of two levels: the National Bank of Moldova and commercial banks. The activities of the National Bank, as a body carrying out banking regulation and supervision, are based on the Law on the National Bank of Moldova, which establishes the main purpose and main tasks of the National Bank, as well as its relations with financial institutions. The Law on Financial Institutions is the main law regulating the activities of financial institutions, including banks.
In accordance with the banking legislation, the National Bank has established a mechanism for supervision and regulation of banking activities by establishing a number of requirements for commercial banks provided for by the regulations of the National Bank of Moldova, which banks are required to comply with. These requirements are constantly being improved in order to align with the provisions of legislation, generally accepted international principles and best practices, in particular, with the recommendations of the Basel Committee on Banking Supervision and the directives of the European Union.
Based on generally accepted standards, the National Bank pursues an active policy in the field of banking regulation and supervision by:

  • establishment of criteria for authorization of banks, capital requirements, regulations on owners and their share of participation, as well as to the heads of banks;
  • establishing requirements aimed at the high quality and functionality of the internal control system of banks, including procedures related to the prevention and combating of money laundering;
  • establishing and monitoring compliance with prudential requirements to limit the level of risk exposure to banks;
  • taking corrective measures, sanctions, establishing special supervision or, if necessary, special administration to solve the problems of banks with high vulnerability.

The function of banking supervision is aimed at ensuring the smooth functioning of the financial system of the Republic of Moldova, based on a strong and competitive banking sector focused on market relations and risk prevention. In this context, the National Bank of Moldova, in accordance with the powers and rights granted by the legislation, carries out bank checks remotely and locally.

The purpose of remote inspections is to monitor and analyze the financial condition of banks in the period between on-site inspections for early identification of risks and possible problems in the bank’s activities and rapid adoption of necessary measures. Licensed banks are monitored on the basis of reports submitted by banks in accordance with the requirements of the NBM concerning FINREP financial statements and prudential reporting and on the basis of information obtained as a result of complex and thematic audits, as well as on the basis of external audit information.
The purpose of the on-site audit is to determine the level of the bank’s risks and assess the ability of the bank’s management to control and effectively manage risks. Every year, each bank is subject to such control. During the on-site inspection, the overall financial condition of the bank is determined, as well as the reasons and factors affecting its security are established. On-site supervision is interconnected with remote supervision, since the information obtained as a result of remote inspections is used to determine the purpose and main tasks of on-site inspections.

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