Glossary term
Regulated Entity (RE)
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Regulated firm, Supervised entity, Regulated institution
A regulated entity is a company or institution that a regulator authorises, supervises and holds to specific rules, such as a bank, insurer, broker, pension fund or payment provider.
Explanation
Whether a body is a regulated entity depends on what it does and where, not on its size. Banks, insurers, securities firms, asset managers, payment institutions and similar businesses need permission to operate, and in return accept rules on capital, conduct, governance and reporting, plus inspections and enforcement. Outside finance, regulators of utilities, telecoms, health care and pharmaceuticals also oversee their own regulated entities. In some countries, one regulator's circulars apply only to those it names, such as commercial banks or non-banking finance companies. The entity must keep authorisation conditions, report on time, and tell the regulator about major changes. Status decides which rulebook, fees and inspections apply to a body, and whether a supervisor can reach it at all.
Example
A fintech company starts lending to small businesses. After obtaining a lending licence, it becomes a regulated entity. From then on it files periodic returns, keeps minimum capital, follows the regulator's rules on customer complaints and can expect an on-site inspection within a few years.
Not to be confused with
- Reporting Entity
- A reporting entity is any body required to file reports, such as suspicious activity reports. A regulated entity is one licensed and supervised by a regulator.