Financial Crime World

Mongolia: Boosting Anti-Money Laundering Regime with $500,000 ADB Grant

Background

In the early 2000s, Mongolia witnessed a rapid growth in its financial system, bringing new challenges and concerns. The expanding economy and financial sector resulted in an influx of funds into the country, raising red flags due to the lack of transparency in some fund transfers. To address these challenges, the Mongolian government sought assistance from the Asian Development Bank (ADB) to strengthen its Anti-Money Laundering (AML) regime.

Establishing an Effective AML Regime

Following the rapid economic growth, the Mongolian government recognized the need to improve financial system surveillance to mitigate the risks of money laundering. In response, the Bank of Mongolia issued a guidebook on AML issues and drafted AML legislation supported by the International Monetary Fund (IMF). However, the government required further technical assistance from the ADB.

Anticipated Outcomes:

  • Promote financial stability
  • Boost investor confidence
  • Enable effective domestic and international investigation of crime

ADB’s Technical Assistance (TA)

The anticipated adoption of the AML law in 2004 spurred a request for technical assistance (TA) from the ADB to establish an effective AML regime compliant with international standards. The primary outputs of the project include:

  1. A time-bound plan
  2. A design for the system to monitor suspicious transactions
  3. An operational financial intelligence unit (FIU)
  4. Staff training programs

Consulting Team & Collaboration

The TA project was led by the consulting team of Ilawara Technology Corporation (ITC). ITC, in collaboration with various Mongolian government agencies, including the Bank of Mongolia, Ministry of Finance, Ministry of Justice and Home Affairs, the General Intelligence Agency, and the Criminal Police Department, delivered outcomes as per their terms of reference.

Project Challenges & Delays

Despite setbacks, such as delays in the AML law adoption following the 2004 parliamentary election, the TA project remained on track with its original cost.

Significant Achievements

The project’s significant achievements include:

  • Amending the AML law based on consulting team advice
  • Establishing the FIU
  • Providing essential documents and guidelines for the FIU and reporting entities

IT Blueprint Report & Additional Funding

The IT blueprint report outlining the design and requirements for the FIU to monitor suspicious transactions was completed and supported with further ADB funding.

Strategic Plan & Training Efforts

The strategic plan, presented milestones and recommendations for Mongolia to improve its AML structure. Despite staffing delays, training efforts were initiated.

Conclusion

In conclusion, ADB’s TA project in Mongolia significantly contributed to the delivery of outputs, despite unforeseen challenges in implementing the AML legislation. The project’s success sets the stage for further comprehensive improvement of Mongolia’s AML regime.