Who supervises banks in Georgia?

The National Bank of Georgia, which under Articles 48 and 49 of the Organic Law holds full authority to inspect commercial banks, microbanks and non-bank deposit institutions and to audit their reporting.

What does a National Bank audit cover?

An audit of accounting documents, components of financial reports and other materials, including the examination of subsidiaries; where signs of a crime are found, the materials are transferred to the relevant authorities.

How can a bank be declared bankrupt?

A commercial bank, microbank or non-bank deposit institution may be declared insolvent or bankrupt only by decision of the National Bank, under a procedure determined by the National Bank itself.

What is the risk-based approach?

A supervision model under which the National Bank distributes supervisory attention according to each entity's money laundering and terrorism financing risk profile, publishes sanction information on its official website and cooperates with law-enforcement bodies.

Bank Compliance Audits in Georgia

The Supervisory Perimeter and Its Legal Basis

A bank compliance audit in Georgia is never a purely internal exercise: it is measured against the mandatory expectations that the National Bank articulates. Article 48 of the Organic Law of Georgia on the National Bank grants the National Bank full authority to supervise the activities of commercial banks, microbanks, banking groups, non-bank deposit institutions, microfinance organizations, independent registrars of securities, brokerage companies other than insurance brokers, the stock exchange, the central and specialized depositories, asset management companies, accountable enterprises, the pension fund, currency exchange points, investment funds, authorized securitization special-purpose entities, payment system operators and payment service providers, the credit information bureau, loan-granting entities and virtual asset service providers.

The National Bank may issue resolutions and orders, give written instructions, impose additional requirements and restrictions, and apply supervisory measures and sanctions. Even at market entry it scrutinizes sources and structures: it may refuse registration, licensing, authorization or the acquisition of a significant share if such a step could threaten the stability of the financial sector, conflict with a requirement of an international organization's mandatory decision or recommendation, breach an agreement between Georgia and a foreign state, or rest on incomplete information about the origin of the funds needed to meet minimum capital requirements.

How Inspections and Audits Are Conducted

Article 49 of the Organic Law frames supervision broadly: issuance and revocation of licenses, including a conditional license for a commercial bank, inspection and regulation, written instructions, additional requirements and restrictions, supervisory measures and sanctions.

Decisive for audit purposes is the power to inspect a commercial bank, a microbank and a non-bank deposit institution, to examine their subsidiaries, to audit accounting documents, components of financial reports and other materials, and to receive any information within its competence. Where signs of a crime emerge, the materials go to the relevant authorities.

The National Bank also reviews rehabilitation plans submitted by commercial banks and may demand changes, and it appoints the temporary administrator and the liquidator, to whom the full powers of all bank organs, including the shareholders' general meeting, pass.

Bank Compliance Audits