Moldova has pledged, under the Memorandum of Economic and Financial Policies (MEFP) published on November 9, to enhance the central bank’s powers and enforcement capacity to identify banks’ ultimate beneficial owners and related-party lending.
The three-year programme recently agreed by the International Monetary Fund (IMF) with Moldova focuses on thorough cleaning of the banking system, while providing guidance and financing to the government on streamlining the economy in particular public finances and the state owned companies.
Specifically, the Moldovan authorities will identify the owners of the banks and will evaluate banks’ lending to entities related to the owners.
Actions already taken have put the country on track to identify the actual owners of the major banks, involved in the past in money laundering and more recently in the siphoning off of $1bn from three banks, later repaid from the central bank’s reserves.
Sound financial institutions operating within a strong regulatory and supervisory environment will allow banks to exit special supervision, and restore their role in supplying credit to productive sectors, unlocking stronger economic growth, the government envisages in the MEFP.
The Moldovan authorities have committed to properly identify the ultimate beneficial owners (UBOs) of the three largest banks (Moldova Agroindbank, Moldindconbank and Victoriabank) by end-December 2016 and in all banks by end-June 2017 (structural benchmarks). The UBOs of the fourth and fifth largest banks that are not subsidiaries of foreign banking groups, will be identified before end-March 2017.
The UBO identification process will be followed by an identification and unwinding of loans to related parties.
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