Financial Crime World

Mongolia Takes Significant Steps to Regulate Virtual Asset Service Providers

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Mongolia has made significant strides in regulating virtual asset service providers (VASPs) and mitigating the risk of money laundering and terrorist financing. According to a report released by the Financial Intelligence Unit, the country has introduced a legal framework to regulate and monitor VASPs, as well as other initiatives aimed at promoting public awareness of the emerging sector.

Regulatory Framework

Mongolia’s authorities have taken steps to include VASPs as reporting entities (REs) under the Anti-Money Laundering and Combating the Financing of Terrorism Law. This move aims to ensure that VASPs are subject to the same regulatory requirements as traditional financial institutions.

Progress and Challenges

The report notes that Mongolia has made significant progress in regulating VASPs, including:

  • Introducing a legal framework for VASPs
  • Including VASPs as REs under the Anti-Money Laundering and Combating the Financing of Terrorism Law
  • Initiatives aimed at promoting public awareness of the emerging sector

However, the report identifies some remaining deficiencies, including:

  • The need for further clarity on risk-based supervision of VASPs
  • The imposition of dissuasive monetary penalties in cases of non-compliance

Future Plans

The Financial Regulatory Commission is expected to complete the full registration process for VASPs by June 2022. This will enable Mongolia to stay ahead of emerging threats in the financial sector and maintain its commitment to combating money laundering and terrorist financing.

Rating Update

Mongolia has been re-rated as “largely compliant” with FATF Recommendation 15, which pertains to the regulation and supervision of virtual assets. This recognition reflects the country’s significant progress in addressing technical compliance deficiencies identified since the last review.

Conclusion

The Financial Intelligence Unit’s report highlights Mongolia’s commitment to combating money laundering and terrorist financing, and demonstrates its efforts to stay ahead of emerging threats in the financial sector. Despite some minor deficiencies, the country’s progress is a significant step forward in regulating VASPs and mitigating the risk of money laundering and terrorist financing.