Suspicious Transactions and Anti-Money Laundering Regime Under Scrutiny
Mongolia’s efforts to establish a robust anti-money laundering (AML) regime have been hindered by a lack of political commitment and a flawed draft law, according to recent analysis. The country’s financial intelligence unit, responsible for monitoring suspicious transactions, remains underdeveloped due to the delay in enacting the AML law.
Shortcomings in the Draft Law
The draft law, which was still under consideration by the government in 2005, had several shortcomings. One of the main issues was the reporting threshold for cash transactions, set at MNT 20,000,000 or more. This level is deemed too high considering Mongolia’s economic situation, which would result in only a handful of cash transactions exceeding this threshold per day.
Failure to Meet International Standards
The analysis also highlighted that the law did not meet accepted international standards, as outlined by the Financial Action Task Force (FATF). The FATF 49 Recommendations provide a framework for countries to implement effective AML regimes. Mongolia’s draft law failed to comply with these recommendations.
Efforts to Develop an Effective AML Regime
Despite these challenges, experts have been working to develop a comprehensive strategy for implementing an effective AML regime in Mongolia. A draft plan was developed and included in the Interim Report, with a final version being finalized during the third onsite visit. The team has also made efforts to establish a financial intelligence unit (FIU) and provide specialized training programs for key institutions responsible for implementing an effective AML regime.
Challenges and Urgent Action Required
However, the lack of a functioning law and political commitment hindered progress in these areas. As John Broome, Team Leader, stated: “The situation is quite challenging… We’ve been working hard to develop a comprehensive strategy, but it’s been difficult to make progress without a functional law.”
APG Mutual Evaluation and Urgent Action Required
The APG Mutual Evaluation of Mongolia, which took place in December 2006, has provided an important impetus for action. The country is under pressure to address its AML regime shortcomings and meet international standards. In the meantime, experts are urging the government to revisit the draft law and take concrete steps to establish a robust FIU and implement effective training programs.
Recommendations
- Revisit the draft law and revise it to meet accepted international standards.
- Establish a functioning financial intelligence unit (FIU).
- Provide specialized training programs for key institutions responsible for implementing an effective AML regime.