Mongolia’s Struggle Against Money Laundering and Terrorism Financing
Ulaanbaatar, Mongolia - In a bid to combat the growing threat of money laundering and terrorism financing, Mongolia has taken steps to strengthen its financial system and improve transparency.
Vulnerabilities in Financial Sector
According to a recent report by the Financial Action Task Force (FATF), Mongolia’s financial sector is still vulnerable to external risks, particularly from neighboring countries such as China, Russia, South Korea, Japan, and the United States. The report highlights the importance of effective implementation of anti-money laundering and combating financing of terrorism (AML/CFT) measures.
Financial Sector Composition
Mongolia’s financial sector is dominated by the banking sector, which accounts for 95.7% of total assets. However, non-banking financial institutions (NBFI), credit cooperatives, security traders, and insurance institutions also play a significant role in the country’s financial landscape.
Potential Channels for Money Laundering and Terrorism Financing
The report notes that Mongolia’s tourism industry, contracted labor, investment, trade, remittances, and loan movements are all potential channels for money laundering and terrorism financing. The country’s small population and financial sector make it relatively low-risk compared to other countries, but its geographical location makes it susceptible to external threats.
Export Products
In 2015, the main export products of Mongolia were mining products (copper, coal), livestock- rising sector products (livestock, meat), industry products (food, cashmere products), and agricultural products. The mining sector is particularly exposed to foreign trade-based money laundering crime.
Measures Implemented to Combat Risks
To combat these risks, Mongolia has implemented various measures, including:
- Establishment of a Financial Intelligence Unit (FIU) to collect and analyze financial intelligence
- National risk assessment framework to identify high-risk areas and sectors
- Strengthened AML/CFT regulations
- Enhanced cooperation with international partners
Role of FIU in Combating Money Laundering and Terrorism Financing
The FIU, responsible for collecting and analyzing financial intelligence, plays a crucial role in identifying and preventing money laundering and terrorism financing activities.
Future Efforts to Combat Money Laundering and Terrorism Financing
Mongolia’s efforts to combat money laundering and terrorism financing are expected to continue, with the government working closely with international organizations such as the FATF and the Asia-Pacific Group on Money Laundering (APG) to stay ahead of emerging threats.