Bank Supervision Department

According to Law no. 03 / L – 209, the Central Bank of the Republic of Kosovo (CBK) has the primary objective of promoting and maintaining a stable financial system. This objective is directly related to the duties and responsibilities of the Department of Banking Supervision (BSD). BSD’s main responsibility is supervision of banks, microfinance institutions and non-banking financial institutions.
Other duties and direct responsibilities of BSD are: supervision of banking institutions, microfinance institutions, institutions dealing with leasing, payment services, credit institutions, money exchange, money transfer agencies and financial institutions other than insurance companies and pension funds; establishing policies for promoting and maintaining the stability of the financial system; collecting, analysing and publishing relevant financial information; cooperating and participating on behalf of the CBK on relevant national and international councils and organizations.

BSD aims the implementation and development of best policies and practices for the regulation and supervision of financial activities in order to ensure the stability of the banking system, i.e. reducing the risk of loss to depositors. BSD’s activity is divided into three separate divisions (i) Division of on-site Supervision, (ii) Reporting and Analysis Division, and (iii) Division of Microfinance Institutions (MFIs) and Non-banking Financial Institutions (NBFIs) Supervision.

Division of on-site supervision (for commercial banks) – includes assessment of banking risks: credit risk, liquidity risk, operational risk, market risk and other risks through the adoption and development of the risk based supervision approach, through analysis and estimates based respectively on financial data reported by banks, as well as during on-site examinations.

Division of reporting and analysis – includes analysis, evaluation and interpretation of financial data reported by banks and other financial institutions and financial assessment of trends. Monitoring the financial health of banks, microfinance institutions and non-banking financial institutions by identifying institutions which indicate financial deterioration; this are the primary task of this division of the Bank Supervision Department.
Division of on-site supervision (for microfinance institutions and non-banking financial institutions) – conform to the approach applied to commercial banks includes risk assessment that concerns this institutions including credit risk, liquidity risk and other risks through adaptation and development of risk-based supervision approach. All this are based on the analysis/evaluations of financial data reported by financial institutions in the country and data collected during examinations.

Specifically, BSD performs the following main functions:
• Compiles and organizes supervision strategies for banks, MFIs and NBFIs;
• Carries out on-site and of site supervisory activities to banks, MFIs and NBFIs;
• Assess the adequacy and effectiveness of governance including the performance of the boards of directors, executive management bodies, as well as other management levels, according to the legislation in force;
• Monitors and evaluates the level of exposure of banks, MFIs and NBFIs to credit risks and other relevant risks, systems for risk management, capital requirements to cover risks, the risk assessment method, performance and sustainability to financial results;
• Oversee compliance of the activities of banks, MFIs and NBFIs the supervisory legal and regulatory framework and best practices associated with their activities;
• Assess the adequacy and appropriateness of policies, procedures, systems and methodologies for risk management;
• Assess the adequacy and effectiveness of internal audit systems for recording and tracking on time the identified weaknesses;
• Assess the adequacy and effectiveness of information technology systems;
• Recommends the imposition of administrative measures to be taken against banks, MFIs and NBFI on increasing their awareness and improving governance in accordance with the legislation in force;
• Proposes enforcement actions against banks, MFIs and NBFI and monitors the implementation of recommendations, requirements and enforcement measures imposed on them;
• Verification the accuracy and completeness of reports submitted by banks, MFIs and NBFIs;
• Preparation and publication of analyses and reports on the financial condition of banks, MFIs and NGOs NBFI;
• Participates in drafting policies, regulatory documents and relevant internal rules;
• Participates and represents CBK on relevant councils and national and international organizations.

Insurance Supervision Department

Based on the Law No. 03/209, the primary objective of the Central Bank of the Republic of Kosovo (CBK) is promoting and maintaining a stable financial system. This objective is directly related to the duties and responsibilities of the Insurance Supervision Department (ISD). The main responsibility of ISD is supervision of insurance financial institutions.

Furthermore, other tasks that are under the responsibility of the ISD are: supervision of insurance companies; collection and publication of relevant financial information; cooperation and participation, on behalf of the Bank on relevant national and international councils and organizations.

Insurance Supervision Department aims to develop and implement policies and best practices for the regulation and supervision of insurance activity, in order to ensure the stability of the insurance system. ISD activity is divided into two separate divisions: Reporting and Analysis Division and On Site Supervision Division.

Among others, the Insurance Supervision Department performs the following functions:

• Drafts and organizes strategies for supervision of insurance companies;
• Assesses the adequacy and effectiveness of governance, including the performance of boards of directors, management and other levels according to the legislation in force;
• Oversees compliance of insurance companies activities with the applicable legal framework and best practices related to their activity;
• Assesses the adequacy and effectiveness of information technology systems;
• Receives and reviews monthly reports of premiums and claims as well as the relevant reporting;
• Receives and reviews annual business plans of insurance companies;
• Receives and reviews quarterly financial statements of insurance companies, as well as prepares respective analyses of the liquidity and insurance risk, the company’s financial strength, minimum paid-in capital, technical provisions and other liabilities, minimum margin of solvency, company’s financial performance, reinsurance program and contracts and other relevant indicators;
• Reviews external auditor’s reports for insurance companies and insurance intermediaries, and prepares relevant annual reports, monitoring and necessary addressing;
• Prepares examination plan and carries out approved examination plans under relevant manuals;
• Performs full and focused examinations of insurance companies;
• Monitors the implementation of required measures based on findings;
• Participates in drafting of policies, regulatory instruments and relevant internal rules.

Licensing and Standardization Department
Based on Law no. 03 / L-209, the primary objective of the Central Bank of the Republic of Kosovo (CBK) is the promotion and maintenance of a sound and stable financial system. This objective is closely related to the tasks and responsibilities of the Licensing and Standardization Department (LSD). The main responsibility of LSD is the licensing of all financial institutions, aspects of their regulation and standardization, as well as the protection of their clients.
Furthermore, the tasks under the direct responsibility of LSD are: implementation of the legal framework concerning the licensing, registration and regulation of all financial institutions; building and developing an appropriate legal and regulatory framework for financial supervision, implementation and adequate compliance with financial supervision laws, regulations and standards, in order to promote and maintain the stability of the financial system, as well as following and monitoring the market behavior of financial institutions oriented especially towards adequate disclosure and consumer protection.
The Department aims to implement and develop international policies and best practices for licensing, registration and regulation of financial activity. The activity of the Licensing and Standardization Department is divided into two separate functions (divisions): (i) Licensing and Standardization Division, (ii) Regulation and Standardization Division.
i. Licensing and Standardization Function (Division) – includes reviewing of applications for licensing of financial institutions to ensure access to the financial market only to those institutions that have sufficient capital to measure and monitor risk, policies and procedures for its control and that propose to have administrators with high level of qualification, professionalism and ethics; as well as the review of requests for necessary prior approvals during the time that the institution conducts its activity;
ii. Standardization and Regulation Function (Division) – includes the development of a regulatory framework, consisting of a set of minimum criteria and rules to be applied by the financial industry, its continuous improvement and review to ensure full compliance with standards, monitors the implementation of the legal framework, the adaptation of international principles and best practices, the process of continuous methodological and practical improvement of the model of supervision of financial institutions in order to ensure its standardization, further increase its effectiveness, and expand risk assessment capacities.
The Licensing and Standardization Department performs the following main functions:
• Ensuring and verifying the accuracy and completeness of the documentation of applications for licensing / registration / authorization as a separate financial institution;
• Review of documentation of financial institutions applications for approval regarding property, governance, administrative or operational aspects;
• Ongoing consultation with the Regulation and Standardization Division, as well as the Legal Department and cooperation with other organizational units of financial supervision regarding the handling of applications for licensing / registration / authorization or approval;
• Preparation of recommendations for decisions related to applications for licensing / registration / authorization or approval, as well as regarding the revocation of licenses / registrations / authorizations granted or revocation of previous approvals;
• Maintaining the central registers of licensed / registered / authorized financial institutions, as well as those whose license / registration / authorization has been revoked;
• Cooperation with relevant financial supervision units to ensure coordination and implementation of joint activities; participating in the review and establishment of supervisory practice and methodology;
• Participate in the drafting of relevant financial supervision policies, regulatory instruments and internal rules; monitoring and analyzing relevant developments, especially the European Union directives;
• Interpretation of various requests coming from financial institutions regarding the implementation of the regulatory framework within the competencies and function of the Department;

Division of Appeals of Financial Services Users
The Division of Appeals of Financial Services Users includes adequate compliance with the laws, rules and standards that guide financial supervision; reviews appeals addressed by policyholders and depositors / borrowers of financial institutions supervised by the CBK, follows and monitors the market behaviour of financial institutions oriented towards adequate disclosure and consumer protection,.
• Review of recommendations for binding measures from relevant financial supervision units and preparation of recommendations for relevant decisions;
• Commitment to advancing legal and ethical compliance to protect the interests of users of the financial institutions services; review of appeals against financial institutions addressed by users of financial services;
• Monitoring and evaluating the market behaviour of financial institutions oriented towards adequate disclosure of information and consumer protection.

Money Laundering and Terrorist Financing Prevention Division
The primary objective of the Central Bank of the Republic of Kosovo (CBK) is the preservation and maintenance of a stable financial system. This objective is related to the tasks and responsibilities of the Money Laundering and Terrorist Financing Prevention Division. This Division is responsible for overseeing financial institutions, with a focus on preventing money laundering and terrorist financing.
The tasks to which the Money Laundering and Terrorist Financing Division contributes include overseeing financial institutions in terms of preventing money laundering and terrorist financing, cooperating and participating in relevant international councils and organizations; and setting policies to promote and maintain the stability of the financial system. The task of preventing money laundering and terrorist financing is not specifically mentioned in the CBK Law. It is the Law on Prevention of Money Laundering and Terrorist Financing that addresses this task and specifies the relevant role of the CBK. The CBK has also developed its own regulations for the field in question.
The Money Laundering and Terrorist Financing Prevention Division aims to ensure the compliance of financial institutions with applicable legislation and regulations governing the prevention of money laundering and terrorist financing. In close cooperation with the Financial Intelligence Unit, as the primary authority in this field, and with other relevant entities, this Division contributes to the development and
implementation of adequate national strategies for the management of relevant risks.
Specifically, Money Laundering and Terrorist Financing Prevention Division has these key functions:
• Develop and implement a supervisory strategy for financial institutions, in terms of preventing money laundering and terrorist financing;
• Conducting examinations of financial institutions in the field of prevention of money laundering and terrorist financing;
• Evaluating the adequacy and effectiveness of governance, including the performance of boards of directors, executive management bodies and other management levels;
• Monitoring and evaluating the level of exposure of institutions to risks in the field of money laundering and terrorist financing prevention,
• Evaluating the adequacy and appropriateness of policies, procedures, systems and methodologies for the management of related risks;
• Evaluating the adequacy and effectiveness of internal audit systems for the identification and timely follow-up of identified weaknesses;
• Drafting strategic development documents, as well as improving relevant supervisory methods and practices;
• Recommending the measures to be taken against financial institutions and monitoring their implementation;
• Participation in initiatives and projects at local and international level, in terms of evaluation and
• strengthening the system of anti-money laundering and countering of terrorist financing;
• Cooperation with relevant organizational units and other relevant institutions.

Division of Pension and Securities Market Supervision
Based on Law no. 03 / L – 209, the Central Bank of the Republic of Kosovo (CBK) has as its primary objective the promotion and maintenance of a stable financial system. This objective is directly related to the duties and responsibilities of the Division of Pension and Securities Market Supervision. The main responsibility of DPSMS is to supervise pension funds and the securities market.
Furthermore, the tasks which are under the direct responsibility of DPSMS are: supervision of pension funds and securities market; collection, analysis of relevant financial information; cooperation and participation on behalf of the CBK in relevant national and international councils and organizations. The scope of supervision of pension funds is specified by the Law on Pension Funds of Kosovo, as well as secondary legislation.
The Division of Pension and Securities Market Supervision aims to implement and develop policies, best practices for regulating and supervising the operation of pension funds and the securities market. Specifically, DPSMS perform these main functions:
• Develops and implements the supervisory strategy of pension funds and the securities market;
• Prepares the annual examination plan and implements the approved examination plans based on the relevant legislation and manuals.
• Analyzes and conducts on-site examinations of pension funds and securities market;
• Recommends the imposition of measures to be taken and monitors the implementation of recommendations by the pension funds and the securities market;
• Participates in the drafting of policies and regulatory documents and internal regulations relevant to the supervision of pension funds and the securities market;
• Supervises the compliance of the activity of pension funds and the securities market with the supervisory legal and regulatory framework and best practices related to their activity.

Department of Administration

The Administration Department is the main organizational unit responsible for administrative affairs in the CBK. The Administration Department intends to create conditions necessary for the normal exercise of CBK operations, ensuring and improving working conditions through better management, maintenance and other support activities. The Department of Administration cooperates with all organizational units of the CBK to fulfil its functions.
The work of the Administration Department is divided into three divisions: the Division of Security, the Division of Procurement, the one of Administrative Services and the Division of Transportation. Each division within the Department of Administration has internal rules and procedures for carrying out their specific functions.
The Division of Security has the duty to ensure and protect staff, premises and assets of the CBK, taking measures and actions in order to enable the contiguity of work in the working environment of CBK. Its functions are based on physical security rules of CBK and it acts upon physical security operational plan. Within the Security Division are included physical security guards, monitors of CSTV and the receptionist.
Procurement Division enforces and implements procurement procedures in the use of CBK funds and other funds allocated in particular through the implementation of CBK’s procurement rules. Procurement Division drafts the annual procurement budget based on the CBK budget in order to meet on time procurement projects and planes. This division organizes and follows administrative procedures to establish contracts and pushes forward their implementation, by performing also market researches in order to assess more accurately the amount of funds needed and procedures to be followed.
Division of Administrative Services and Transport together with its staff members and external contractors deals with the technical maintenance of the building and various equipment and transportation of personnel and assets of the CBK. This division makes assessments and analyses based on which are drafted and proposed necessary projects for repair, remodel and better use of the building space. In cooperation with relevant organizational units in the BQK this division drafts the Annual Plan of work and services, as well as plan for their implementation. Within this Division there are the unit of maintenance, transport unit, archive and cafeteria.