Financial Crime World

Mongolia’s Money Laundering and Terrorism Financing: A Growing Concern

Introduction

Ulaanbaatar, Mongolia - Money laundering and terrorism financing have become major concerns for Mongolia’s economy. The country’s small population and financial sector make it vulnerable to external threats.

Money Laundering Threats

According to the National Risk Assessment (NRA), the risk exposure of Mongolia to external money laundering threats is relatively high. Potential areas of concern include:

  • Tourism
  • Contracted labor
  • Investment
  • Trade
  • Remittance
  • Loan movements directed to Mongolia

The country’s small financial sector, dominated by the banking sector, makes it an attractive target for money launderers. In 2015, the banking sector accounted for 95.7% of total assets in the financial system.

Foreign Trade Risks

Mongolia’s foreign trade is also a potential area of concern. The country’s main export products - copper, coal, and livestock products - are highly exposed to foreign trade-based money laundering crimes. Over-invoicing and other fraudulent practices are common methods used by criminals to transfer illegal funds abroad.

Risk Exposure from China and Russia

The risk exposure from China and Russia is particularly high, with 35.4% of foreign citizens working in Mongolia coming from these countries. The report also highlights the importance of monitoring remittance transactions, as this channel has been used by money launderers to move illegal funds.

Combating Money Laundering and Terrorism Financing

To combat money laundering and terrorism financing, Mongolia’s Financial Intelligence Unit (FIU) has implemented several measures, including:

  • Establishing a national risk assessment framework
  • Developing anti-money laundering regulations

Conclusion

Mongolia’s small population and financial sector make it vulnerable to external threats. It is essential for the country to strengthen its financial regulatory framework and enhance cooperation with international partners to combat money laundering and terrorism financing.

Key Statistics

  • Total assets in the financial system: 95.7% held by banking sector
  • Number of foreign citizens working in Mongolia: 6,800 from 78 countries
  • Risk exposure from China and Russia: 35.4%
  • Main export products: Copper, coal, livestock products
  • Potential areas of concern: Tourism, contracted labor, investment, trade, remittance, and loan movements directed to Mongolia

Source

National Risk Assessment (NRA), Financial Intelligence Unit (FIU)