Mongolia's AML Progress: From PC to LC and Back
The Asia/Pacific Group on Money Laundering (APG) has evaluated Mongolia's efforts to enhance its anti-money laundering (AML) and counter-terrorism financing (CTF) regulations with the latest follow-up report. This report, named the Fifth Follow-Up Report (FUR), was published in July 2022.
Mongolia's Improvement since the Mutual Evaluation Report
The Mongolian government has shown significant improvement since the Mutual Evaluation Report (MER) was adopted in September 2017. According to the FUR, Mongolia has moved closer to full compliance with international AML/CTF standards.
Analysis of Mongolia's Progress towards AML/CTF Recommendations
The FUR evaluates Mongolia's progress towards addressing the technical compliance requirements from earlier reports. With improvements in the legal framework and operational capabilities, significant strides have been made.
| R. Rating | MER 2017 | FUR 2021 |
|---|---|---|
| 1 | PC | LC |
| 2 | PC | LC |
| ... | ... | ... |
| 15 | LC (downgraded to PC in 2020 FUR) | LC |
Improvements in Identifying and Mitigating ML/TF Risks Related to Virtual Assets
Recommendation 15, which pertains to identifying, assessing, managing, and mitigating ML/TF risks in the virtual assets sector and virtual asset service providers (VASPs), has seen considerable improvements.
Some of the advancements include:
- New regulations
- On-site visits
- A registration regime for VASPs
The Mongolian Financial Regulatory Commission (FRC) has taken several steps to prevent or mitigate ML/TF risks related to VASPs' virtual asset activities. Some actions include:
- Risk assessments
- Guideline issues
- Outreach initiatives to raise awareness
- Enactment of new laws and regulations
Challenges Mongolia Still Faces
Despite the remarkable progress, Mongolia faces some challenges, such as:
- The need for further clarity in risk-based supervision of VASPs
- The absence of explicit regulatory measures to prevent associates of criminals from holding or being beneficial owners or holding management functions in a VASP -The lack of dissuasive monetary penalties in case of non-compliance
Mongolia's Commitment to Full Compliance with International AML/CTF Standards
The APG recognizes Mongolia's progress and emphasizes the need for continuous efforts to ensure full compliance with international AML/CTF standards. The Mongolian government remains committed to addressing these challenges and striving for further improvements in the future.