Financial Crime World

Mongolia’s Financial System Under Scrutiny: Failing to Meet International Standards

Ulaanbaatar, Mongolia - A recent report by international consultants has revealed significant shortcomings in Mongolia’s efforts to combat money laundering and terrorist financing. The country’s financial system has been found to be woefully inadequate, failing to meet accepted international standards.

Shortcomings in the Draft Law on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

The report highlights several key weaknesses in Mongolia’s draft law on AML/CFT:

  • High reporting threshold: The current threshold of MNT 20,000,000 or more for cash transactions is too high, with only a handful of transactions exceeding this amount.
  • Failure to meet international standards: The law does not meet accepted international standards for combating money laundering and terrorist financing.

Lack of Political Commitment

The report criticizes the government’s lack of political commitment to implementing an effective AML/CFT regime:

  • Rejection of attempts to lower reporting threshold
  • Insufficient resources and support for implementation
  • Delayed establishment of a financial intelligence unit (FIU)
  • Lack of specialized training programs for key institution staff

Government Response

In response to the report’s findings, the government has announced plans to develop a comprehensive strategy for strengthening and maintaining support for the implementation of an effective AML/CFT regime. The strategy will include measures to:

  • Improve transparency and accountability
  • Enhance cooperation between financial institutions and law enforcement agencies

Impact on Mongolia’s Economic Development

The controversy surrounding Mongolia’s financial system is likely to have significant implications for the country’s economic development and its reputation as a stable and secure investment destination. It is crucial that the government implements reforms effectively and efficiently to prevent further delays and setbacks.

Next Steps

Mongolia will undergo a Mutual Evaluation by the Asia-Pacific Group on Money Laundering (APG) in 2007, which will assess the country’s compliance with international AML/CFT standards. The report’s findings highlight the need for immediate action to address weaknesses and ensure that Mongolia meets international standards.

Conclusion

Mongolia’s financial system is under scrutiny, and it is essential that the government takes swift action to address the shortcomings identified by the consultants. With a comprehensive strategy in place, Mongolia can strengthen its AML/CFT regime and maintain its reputation as a stable and secure investment destination.