Financial Regulation

The Financial Regulation department (FRD) of the Bank is responsible for the regulation and supervision of the banks and other financial institutions in the Kingdom. The Bank derives this mandate from legislation including, the Central Bank Order, 1974 (as amended), the Financial Institutions Act of 2005, Exchange Control Order of 1974 and Money Laundering and Terrorism Financing (Prevention) Act of 2011(as amended), (MLTFP Act). The Department is also charged with the responsibility of financial stability from a macro-prudential perspective. The Department comprises of the following functions and consistently enhances processes for better and optimal delivery of its mandate; the Banking Supervision Division (micro- prudential function), the Policy, Conduct & Enforcement Division (incorporating Policy Enforcement as well as Market Conduct & Consumer Protection), Financial Surveillance Division (responsible for exchange control and AML supervision) and lastly, the Financial Integrity Division (responsible for supervising the implementation of the Money Laundering as governed by Money Laundering and Financing of Terrorism (Prevention) Act, 2011 (as amended) and subsidiary regulations in the banking sector). The FRD values its people and respect the public-good mandate bestowed on it. We constantly strive for objectivity and accountability in what we do. We consider the synergy and health nexus across the functional units to be our ultimate strength. The Bank Supervision Division is a micro-prudential function within FRD and responsible for supervising banks. To ensure that the supervision and regulation of banks is robust and effective, the Division follows international standards, in particular the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision. The Division embraces onsite and offsite approaches to banking supervision, receives financial information from supervised institutions on a frequent basis for purposes of assessing the soundness of banks on an ongoing basis. Prudential standards for banks relate to capital adequacy, asset quality of banking book, risk management, liquidity and funds management, stress testing and loan loss provisioning for banks. Banking supervision is a public good, entailing monitoring banks’ control systems, activities and financial conditions to safeguard safety of depositors’ funds and soundness of the financial sector. The Division collaborates with the other Units within FRD and other Departments in the Bank to foster confidence and stability of the system that will be conducive for economic development in the Kingdom. The Financial Surveillance Division monitors the daily administration of exchange controls in the country and ensures preservation of the integrity of the financial system. This is a delegated function to the Bank in terms of Section 48 (Agent for the administration of Exchange Control) of the Central Bank Order, 1974. The FSD administers the Exchange Control Order, 1974 and Regulations issued under Legal Notice No.2 of 1975. The Unit’s main functions include; monitoring compliance with provisions of the exchange controls regulations; receive, analyze and disseminate information on exchange control and cross border foreign exchange transactions. The FSD is also responsible for licensing Authorized Dealers with Limited Authority (ADLAs) including institutions that provide cross-border remittance services. The recent change of the Division’s name from Exchange Control to Financial Surveillance marks the change in approach in the administration of exchange controls. The new approach emphasizes on post monitoring of foreign currency transactions. Authorized Dealers therefore have more independence to process foreign currency transactions with limited need for prior approval by the Central Bank. This serves to improve the ease of doing business in Eswatini. The Financial Integrity Division is a dedicated supervisor for anti-money