Mongolia’s Financial Sector at Risk: Types of Financial Crimes on the Rise

Money laundering and terrorism financing are becoming increasingly pervasive in Mongolia, posing a significant threat to the country’s economic security. These crimes not only harm the economy but also undermine social stability and perpetuate poverty.

Sources of Money Laundering Crimes

• Financial flows derived from illegal activities such as:
  • Human trafficking
  • Drug trafficking
  • Arms smuggling
  • Corruption
  • Bribery
  • Environmental crimes
  • Tax evasion
  • More

Criminals are using Mongolia’s developing financial sector as a transit center to launder their ill-gotten gains and finance terrorism.

Weak Financial System and Lack of Effective Regulations

• Despite efforts to combat money laundering, Mongolia remains vulnerable due to:
  • Weak financial system
  • Lack of effective regulations
• The Law on Combating Money Laundering and Terrorism Financing (AML/CFT Law) was enacted in 2006 but has been criticized for not fully complying with international standards set by the Financial Action Task Force (FATF).

AML/CFT System Evaluation

• Mongolia’s AML/CFT system was first evaluated by the Asia/Pacific Group on Money Laundering (APG) in 2006 and again in 2016.
• The country was previously listed as a “high-risk and non-cooperative” nation, or “grey list,” due to its failure to meet FATF’s Recommendations.

Revisions and Technical Assistance

• After revisions to the AML/CFT Law were approved in 2013 and 2014, Mongolia was removed from the grey list.
• The country has received technical assistance from international organizations such as:
  • International Monetary Fund (IMF)
  • Asian Development Bank (ADB)

National Strategy for Anti-Money Laundering and Countering Financing of Terrorism

• Developed to strengthen anti-money laundering and combating terrorism financing framework
• Measures include:
  • Improving financial sector supervision
  • Enhancing customer due diligence
  • Reporting of suspicious transactions
  • Cooperation with foreign authorities

Implementation of National Strategy

• The implementation of this national strategy is crucial to protecting Mongolia’s financial system from the threat of money laundering and terrorism financing.
• With continued efforts to strengthen regulations and enforcement, the country can reduce its risk exposure and promote a more stable and secure economic environment for its citizens.