Draft

LAW OF MONGOLIA

ON INTERNATIONAL FINANCIAL CENTER

…..month ……day 2023 Ulaanbaatar

CHAPTER ONE
General provisions

Artcle 1. Purpose of the law

1.1. The purpose of this law is to establish an international financial center,
to set a special requirements for the management, organization, and operation of
the financial center, to define the financial services to be provided in the financial
center, and to manage the relations related to their regulation and control.

Article 2. Legislation on international financial centers

2.1. The legislation on international financial centers consists of the Constitution of
Mongolia, the Law on Free Zones, the Law on Combating Money Laundering and the
Financing of Terrorism, this law and other legislative acts issued in accordance with them.
2.2. If the international agreement of Mongolia stipulates otherwise than this law,
the provisions of the international agreement shall be followed.
Article 3. Scope
3.1.In the territory of the international financial center, an independent legal
framework for the regulation of civil relations and financial services shall be applied.
Article 4. Definitions
4.1. The following terms used in this law shall have the following meanings:

4.1.1. "international financial center (hereinafter referred to as "Financial

Center")" shall mean a territory with a special regime established by the Parliament of
Mongolia within the boundaries of which the international banking, financie, law, audit,
insurance and capital market professional organizations are engaged to provide the
financial services as defined in Article 6 of this law;
4.1.2. "financial work and service" shall mean the financial services as
defined in Article 6 of this law, which requires a special license issued by the financial
control and regulation organization of the Financial Center;

4.1.3. "special regime" shall mean simplified conditions for tax, visa and
employment regulations and registration of services as defined in Article 6 of this law to
be implemented within the boundaries of the financial center, other that the Laws
governing the financial activities of Mongolia.
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 CHAPTER TWO
OBJECTIVES AND ACTIVITIES OF THE FINANCIAL CENTER

Article 5. Objectives of the financial center

5.1.The Objectives of the Financial center are:
5.1.1. To contribute to the economic development of Mongolia.
5.1.2. To bring the domestic financial market to an internationally
competitive level and to promote the development of Ulaanbaatar the capital of
Mongolia into a modern international financial center based on the principles of high
efficiency, ethics and transparency of financial services.
Article 6. Financial work and services in the financial center
6.1. The following financial services will be provided on the basis of a special
license issued by the financial control and regulation organization:
6.1.1. banking and financial services;
6.1.2. securities (bond or shares) services (stock market) and trading of
financial derivatives and related professional consulting services;

6.1.3. insurance, reinsurance, insurance brokerage;

6.1.4. pension fund, investment fund, asset management trust services;
6.1.5. project financing, investment and asset management services;
6.1.6. factoring, financial leasing and warrant services
6.1.7. securities settlement, clearing and custodial services;
6.1.8. legal, auditing, accounting and other services;
6.1.9. financial and IT services.
6.2. A person engaged in financial services in a financial center is prohibited from
communicating with, withdrawing deposits and assets from citizens and legal entities
permanently residing in the territory of Mongolia.
Article 7. Other activities that can be carried out in the financial center
7.1. Financial support services and business activities other than those specified
in Article 6.1 of this law may be engaged in accordance with the relevant regulations of
the Financial Center on the basis of obtaining permission from the Financial Center
Administration.
Article 8. Financing and investment guarantees of Financial center
8.1. Financing and investment guarantees of the financial center shall be
provided in the following forms:
8.1.1. The source of the investment fund of the National Wealth Fund
8.1.2. Development Bank resources with pay back terms;

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 8.1.3. Funds allocated from the state budget of Mongolia for free zone
infrastructure investment;
8.1.4. Registration fees for legal entities and citizens operating in the
financial center, special license fees, regulatory service fees and other service fees and
commissions collected from special license holders;
8.1.5. other income from legal activities.

CHAPTER THREE
SPECIAL REGIME AND PRINCIPLES OF THE FINANCIAL CENTER
Article 9. Principles to be followed in the financial center
9.1. An entity holding a license to conduct financial activities in the Financial
Center shall be located and operate its activities within the boundaries of the Financial
Center.
9.2. Any entity with a special license to trade on the Stock Exchange of Mongolia
shall not operate in the Financial Center without the permission of the Financial
Regulatory Commission and the stock exchange to which it is registered.
9.3. An insurance company licensed to operate in the financial center may
conduct reinsurance operations in other territories of Mongolia.
9.4. The activities conducted in the financial center shall not contradict the
international agreements to which Mongolia is a party.
9.5. The Parliament of Mongolia approves other legislation necessary to meet the
goals of the Financial center, and the monitoring over the compliance with the laws of
Mongolia shall be conducted by the Government.
Article 10. Special operating regime of the financial center
10.1. The financial control and regulation organization committee shall prepare
the draft of special legislation for financial work and services to be applied in the
Financial center and submits to the Government, and the Government according to its
duties and responsibilities shall be responsible for the submission to and approval by
the Parliament of Mongolia.
10.2. Citizens and legal entities engaged in activities specified in Articles 6 and 7
of this law in the financial center shall be exempted from income tax for 50 years.
10.3. Investments made from the financial center to other parts of the territory of
Mongolia and any transfer of money and assets transferred to the territory of foreign
countries shall be exempted from any tax for 50 years.
10.4. Issuance of entry and exit visas to foreign nationals visiting the Financial
Center and residence permits for foreign nationals and employees of enterprises
operating in the Financial Center with a special license shall be regulated in accordance
with the procedures approved by the Financial Center Board of Directors and the
competent state authorities.
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 10.5. Citizens and legal entities operating with a special license in the financial
center shall be exempted from customs duties on goods and materials imported for their
official use.
10.6. An entities engaged in financial services in the Financial center shall not
use Mongolian currency in their licensed activities.
10.7. The Financial center's administration, registration office, financial control
and regulation organization and dispute resolution arbitration organizations operational
language shall be English.

CHAPTER FOUR
LEGAL STATUS OF THE FINANCIAL CENTER
Article 11. Legal status of the Financial center
11.1. The decision on establishment of a Financial center, determination of the
location, size, and boundary and any changes on above shall be made by the
Parliament upon the submission of the Government.
11.2. The financial center shall be a special economic and administrative unit and
shall be a legal entity with independent rights and obligations in civil relations.
11.3. The financial center shall work under the direct jurisdiction of the
Government. In terms of operational structure and administration, the following
organizations will work to implement the special functions specified in this law:
11.3.1. financial center administration (Office of the Governor);
11.3.2. financial control and regulation organization;
11.3.3. dispute settlement arbitration organization.
11.4. The President of the financial center, the head of the financial control and
regulation organization, and the arbitrator of the dispute resolution arbitration
organization shall meet the following requirements:
11.4.1. Be an expert, analyst, judge, arbitrator who has worked in
international banking, finance, law and judicial institutions, and is specialized in banking,
finance, insurance, and securities market services;
11.4.2. have at least 10 years of experience in their profession and
specialized field, and have a reputation in their country and internationally;
11.4.3. without punishment.
Article 12. Financial Center Board
12.1. The highest governing body of the Financial Center is the Board of
Directors of the Financial Center.
12.2. The composition of the board of directors of the Financial Center includes
the President of Mongolia, the Parlaiment Speaker, the Prime Minister, the Minister
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responsible for finance and economic development, the President of the Bank of
Mongolia, the Chairman of the Financial Regulatory Committee and the President of the
Financial Center.
12.3. The President of the Financial Center shall be elected by the procedure
specified in Article 12.8 of this Law and appointed by the Government for a period of 6
years. The President of the Financial Center is the administrative manager of the
Financial Center. The President of the Financial Center shall have an operational office.
12.4. The President of the financial center shall create the conditions for the
smooth operation of the financial center organizations without affecting their
independent activities and coordinate their activities.
12.5. The board of directors of the financial center shall select and appoint the
head of the financial control and regulation organization and the arbitrator of the dispute
resolution arbitration organization according to the criteria specified in clauses 12.6 and
12.7 of this Article.
12.6. The head of the financial control and regulatory organization shall be
selected and appointed from among foreign nationals through an international selection
process, taking into account the experience and knowledge of working in international
financial control and regulatory organizations.
12.7. The arbitrators of the dispute settlement arbitration organization shall be
selected and appointed from among foreign nationals through an international selection
process, taking into account the years they have worked in the international arbitration
organization and their qualifications.
12.8. As the President of the financial center, a citizen of Mongolia who meets
the criteria specified in Sections 11.4.1, 11.4.2 and 11.4.3 of this law shall be selected
and appointed through an open selection procedure.
Article 13. Powers of the Financial Center Board
13.1. The board of the financial center shall have the following powers:
13.1.1. approval of the development strategy and objectives of the
Financial Center in accordance with the development policy of Mongolia;
13.1.2. selection and dismissal of the head of the financial control and
regulation organization and the arbitrator of the dispute settlement arbitration
organization, and determining the amount of their salaries and bonuses;
13.1.3. approval of the annual budget and work plan of the financial
center's administration, financial control, regulatory bodies, and arbitration bodies,
discussing financial and operational reports;
13.1.4. establishment of the policy commitees composed of foreign and
domestic experts to provide professional assistance necessary for the implementation
of the goals of the financial center;

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 13.1.5. expand cooperation with other foreign and domestic organizations
and free zones, implementing joint projects and programs;
13.1.6. ensuring the implementation of policies for the development,
efficient use and operation of the Financial center infrastructure;
13.1.7. development and submittion to the Government the draft of
legislation related to the development of the Financial center;
13.1.8. approval the rules, regulations and instructions to be followed in
the area of the financial center, except for the enforcement within the scope of their
powers stipulated in this law, supervising their implementation and resolving complaints
related to their implementation;
13.1.9. other rights and duites authorized by the Parliament and
Government.
Article 14. Powers of the President of the Financial Center
14.1. The President of the Financial Center shall have the following powers:
14.1.1. implementation of Financial center's development strategy and
goals, coordination of center's activities;
14.1.2. representing the financial center abroad and domestically, signing a
contracts on its behalf;
14.1.3. within the framework of this law and the powers granted by the
Financial Center's Board of Directors, make decisions related to the development and
investment of the Financial Center and non-financial activities to be followed on the
territory of the Center;
14.1.4. define and implement the financial center's administrative
personnel policy, conclude and terminate employment contracts with employees.
Article 15. Financial Center Administration
15.1. The administration of the financial center will be headed by the President,
and the administration will have the governor's office.
15.2. The administration of the financial center shall perform the following
functions:
15.2.1. development of policies, strategies and plans of the financial center
and approval by the board of directors of the financial center, and ensuring their
implementation;
15.2.2. ensuring the implementation of rules, regulations and instructions
related to non-financial activities of the Financial center;
15.2.3. responsible for and organizing common services, security,
transportation, communication, information technology and other related supplies
related to the planning, construction, operation, and protection of the Financial center's
infrastructure and buildings;
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 15.2.4. Management of the current assets and fixed assets of the financial
center and implementation of asset management;
15.2.5. establishing the amount of registration fees and contributions of the
Financial center and collecting;
15.2.6. monitor the activities of citizens and legal entities that have been
granted and registered with a special license to operate in the free financial zone within
the scope of their authority, and impose responsibility as prescribed by relevant laws
and regulations.
15.2.7. approve rules and regulations related to asset registration;
15.2.8. ensuring data storage, protection and security of Financial center
information.
Article 16. Financial Center Registration Office
16.1. The administration of the financial center shall have a registration office.
The structure, staffing, budget and operational procedures of the registration office shall
be approved by the Financial Center's Board of Directors.
16.2. The registration office of the financial center shall conduct registration of
legal entities, property ownership rights and other rights and pledges related to property.
16.3. Relationship in regard to the segistration in the Financial center shall be
regulated by law.
16.4. In addition to the provisions of this law, the registration office may perform
other functions assigned by the administration of the Financial Center.
16.5. The head of the registration office is appointed and dismissed by the
President of the Financial Center.
16.6. The head of the registration office will report to the President of the
Financial Center on matters such as work and budget plans, implementation, financial
reporting, operational goals, medium and long-term strategies of the registration office.
.
CHAPTER FIVE
FINANCIAL SUPERVISION AND REGULATORY AUTHORITY
Article 17. Financial Supervision and Regulatory Authority
17.1. The financial supervision and regulatory organization shall perform the
function of controlling and regulating financial work and services in the Financial center.
A committee with an advisory role to the head of the financial control and regulation
organization shall be established and operated.
17.2. The management of the financial supervision and regulation organization
shall report to the Board of Directors of the Financial Center.

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 17.3. The structure, staff and budget of the financial supervision and regulatory
organization shall be approved by the Financial Center Board of Directors.
Article 18. Functions of financial supervision and regulatory organization
18.1. The financial supervision and regulatory organization shall have the
following functions:
18.1.1. issuance of special licenses to entities engaged in financial
services in the financial center and keeping records of entities with special licenses;
18.1.2. supervision the activities of entities providing financial services with
a special license in the financial center, impose responsibility and take coercive
measures in cases stipulated by relevant laws, rules and regulations;
18.1.3. development and implementation of policies, plans and programs
for the organization of financial work and services in the Financial center, and present
and report to the Financial center's board of directors;
18.1.4.development and enforcement of the rules and regulations
governing financial work and services in the Financial center;
18.1.5.establishing the amount of regulatory fees and charges to be
charged from entities engaged in financial services with a special license, and collecting
those fees and charges;
18.1.6. draft of yearly budgets and submission for the approval by the
Financial Center's Board of Directors;
18.1.7. submition and approval of the annual financial and operational
report to the Financial center's board of directors;
18.1.8. Others authorized by the board of directors of the Financial center.

CHAPTER SIX
ARBITRATION ORGANIZATION FOR DISPUTE RESOLUTION
Article 19. Arbitration body for dispute resolution
19.1. An independent arbitration body shall work in the financial center.
19.2. It is prohibited to interfere or attempt to influence the dispute resolution
process of the arbitration organization by the Financial center's board of directors,
administration and financial control and regulatory bodies.
19.3. The activities of the arbitration organization of the Financial center are
regulated by the laws on international arbitration and the laws approved by the
Parliament of Mongolia in accordance with them.
19.4. An arbitration institution for dispute resolution shall be established in the
Financial center by the decision of the Parliament of Mongolia.
Article 20. Arbitration Council
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 20.1. An arbitration counsil shall under the arbitration organization for dispute
resolution, and the shall perform the following functions:
20.1.1. development of the arbitration institution as a center for resolving
international legal disputes;
20.1.2 develop proposals for the organization of necessary academic
meetings, conferences, trainings and events related to implementation of dispute
resolution procedures at a high professional level and retraining of arbitrators, present
them to the Financial Center's board of directors and make a decision;
20.1.3. cooperation with domestic, regional and international arbitration,
mediation and other dispute resolution organizations and introduction of joint services;
20.1.4. and determining the amount of fees and charges for arbitration
services.
CHAPTER SEVEN

OTHERS
Article 21. Responsibilities in case of breaching the Law
21.1. Financial center organizations shall have the right to revoke the special
license for activities of citizens and legal entities who violate the laws and regulations of
the financial center.
Article 22. The law will come into force
22.1. This law shall be enforced from the date of....

Signature