Financial Crime World

Mongolia Struggles to Combat Money Laundering and Terrorism Financing

Ulaanbaatar, Mongolia - In an effort to curb money laundering and terrorism financing, Mongolia has been working to strengthen its anti-money laundering and combating terrorism financing (AML/CFT) regulations. The country’s financial sector has long been at risk of being exploited by criminals due to its lack of robust AML/CFT measures.

Sources of Money Laundering Crimes in Mongolia

According to experts, the main sources of money laundering crimes in Mongolia are:

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

These illicit funds are often laundered through the country’s financial system, making it difficult for authorities to trace their origin.

History of AML/CFT Efforts in Mongolia

In 2006, the Mongolian Parliament approved the Law on Combating Money Laundering and Terrorism Financing (AML/CFT Law), which aimed to combat money laundering and terrorism financing. However, the country’s AML/CFT system was found to be lacking in several areas, leading it to be identified as a “high risk and non-cooperative country” by the Financial Action Task Force (FATF).

Revisions and Progress

In 2013, Mongolia revised its AML/CFT Law to comply with FATF Recommendations. The country made significant progress in implementing the new law, which led to its removal from the FATF’s “grey list” in 2014.

Recommendations for Further Improvement

Despite this progress, international organizations such as the International Monetary Fund (IMF) and Asian Development Bank (ADB) have been recommending Mongolia to further strengthen its AML/CFT framework. The country has been advised to implement the FATF Recommendations fully and keep pace with changing global standards.

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

In response, Mongolia adopted a National Strategy for Anti-Money Laundering and Countering Financing of Terrorism in 2017, which outlines measures to enhance the country’s AML/CFT capacity. The strategy aims to strengthen cooperation between government agencies, financial institutions, and international organizations to combat money laundering and terrorism financing.

Conclusion

The success of Mongolia’s efforts will depend on its ability to fully implement the National Strategy and maintain a robust AML/CFT framework. Failure to do so could result in further reputational damage and increased risk of financial crime.