BC Mongolia: Anomalies in new law on use of MNT

Economic and Legal Consultancy (ELC) has called attention to discrepancies in the new law on the use of MNT in transactions. For example, the law prohibits both “making payments and settlements and announcing and promotion in foreign currency or calculation units” without the consent of the Central Bank, and “setting prices in foreign currency or calculation units”. ELC feels if “setting” of prices is interpreted as “announcing and promotion” the ban is redundant. If, however, the word is interpreted as “the internal/commercial process of coming up with an amount before announcing a price”, then the prohibition violates the fundamental right of an individual or a legal entity to act in a free market environment.

Another anomaly appears when the law authorizes the Government to demand correction of any violation and, at the same time, to confiscate the revenue generated, though another section of the law mentions fines if the violation is not remedied. No due process is set out (i.e. notice first and then upon failure to act on the notice, sanctions following), nor is any time frame provided for the correction. “It is likely that confiscation of revenue in foreign currency will be imposed right away for ‘the first strike’,” ELC says and advises discretion.

Source: www.mol.mn