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 & Enforcement Division (incorporating Market Conduct and Consumer Protection), Financial Surveillance Division (responsible for exchange control and AML supervision) and lastly, the Financial Stability Unit (macro-prudential function). 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.

Banking Supervision Division (BSD)

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.

Financial Surveillance Division (FSD)

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.

Anti-Money Laundering Unit

Housed within the Financial Surveillance Division, this is dedicated Unit responsible for AML matters. The mandate is derived from Section 35 of the MLTFP Act. This piece of legislation vest powers to the Bank to implement standards to combat money laundering, financing of terrorism and proliferation financing of weapon of mass destruction requirements. Accountable institutions in the banking sector include; commercial banks, forex exchange bureaus, money value transfer service providers and money remittances.

The Unit has adopted a risk-based approach to identification, understanding, assessment and mitigation of Money Laundering/Terrorist Financing/Proliferation Financing risks in the banking sector. To remain agile, the Unit periodically conducts sectorial risk assessments to inform its supervisory activities, conducts research and monitors trends and typologies to ensure that it responds appropriately to emerging AML risks.

This Unit represents the Bank in AML National Task Force whose terms of reference include advising Government on the national AML policy formulation and implementation. The AML Unit collaborates with other competent authorities in the fight against money laundering, terrorist financing and proliferation financing of weapons of mass destruction. The collaboration is through joint inspections, joint investigations and capacity building interventions.

Policy & Enforcement Division

The core function of the Policy and Enforcement Division is to formulate and develop financial policies for the sector institutions within the purview of the Bank. It reviews and updates the existing regulatory framework to ensure that it remains fit for purpose in line with the changes in the financial sector, international standards and best practice. The Division is also charged with the responsibility of implementing enforcement action on regulated institutions under the purview of the Bank. This is to ensure compliance with regulatory framework within the overarching principles of fostering financial system stability, integrity and protection of financial services consumers. The Division also reviews and analyses license applications in consultation with other Divisions within FRD and other Departments of the Bank.

Market Conduct & Consumer Protection Unit

The Division houses the Market Conduct and Consumer Protection Unit, which is responsible for ensuring that banks and other financial services providers under the purview of the Bank have market conduct related policies and practices that comply with the applicable regulatory framework. This ensures the securing of an appropriate degree of protection and fair treatment of consumers of financial services; protection and enhancement of the integrity of the financial system and promotion of effective competition in the interest of consumers. The Unit also follows onsite and off-site approach to market conduct supervision and employs other useful means for market monitoring such as mystery shopping. The Unit is also responsible for public awareness and financial education on banking and financial services. Read More

Financial Stability Unit

This Unit is the macro-prudential arm of financial stability mandate bestowed on the Bank. The mandate is enshrined in the Central Bank Order, 1974 as well as the Constitution of the Kingdom of Eswatini Act, 2005. Therefore, the FSU is responsible for assessing systemic risk in the system working with other stakeholders, especially in the regulation space. The Bank has defined financial stability as a “condition in which the financial system – comprising of financial intermediaries, markets and market infrastructures is capable of withstanding internal and external shocks such that participants have confidence in the system”. Financial and relevant data is collected and analysed, with assessment made for vulnerabilities in the financial system. The FSU’s main areas of focus for system-wide assessment is the households sector, Corporations, Government and Real Estate Prices.

The financial system comprises financial institutions (banks, insurance and retirement funds), Financial Markets (Money, Equities, and Foreign Currency), and National Payment and Settlement Systems (which provide the networks that enable transactions to occur). The interaction between international and domestic systems is also a focus area for this Unit. The Unit disseminates the Bank’s assessment of systemic risk through the Financial Stability Report (FSR), which is issued annually and available for public consumption.

Important Documents