Financial Crime World

Mongolia Takes Significant Steps to Combat Money Laundering and Terrorist Financing

The Mongolian Financial Regulatory Commission (FRC) has made significant progress in addressing technical compliance deficiencies identified by the Financial Action Task Force (FATF), according to a recent report.

Progress Made

Mongolia has introduced a legal framework to regulate and monitor virtual asset service providers (VASPs) and other initiatives to spread public awareness of the emerging sector. This has enabled authorities to mitigate money laundering and terrorist financing risks associated with VASPs and virtual assets in Mongolia.

Key Findings

  • Requirements for Virtual Asset Transactions: Mongolia has implemented requirements for VASPs to collect originator and beneficiary information for virtual asset transactions above a certain threshold.
  • Regulations for Virtual Asset Service Providers: The FRC has issued regulations requiring VASPs to register and providing for cooperation with similar international bodies.
  • Asset Freeze Requirements: Mongolia has extended its obligation to freeze assets without delay and prior notice to registered VASPs and their virtual asset transactions.

Remaining Gaps

  • Risk-Based Supervision of VASPs: Further clarity is needed on risk-based supervision of VASPs.
  • Dissuasive Monetary Penalties: There is an absence of dissuasive monetary penalties in cases of non-compliance.

Recommendation 15: Registered VASPs Provide VA Services

The recommendation assesses whether registered VASPs provide virtual asset services on behalf of customers, subject to the requirements of Article 7.7 of the VASP Law.

Mongolia’s rating for this recommendation is Largely Compliant. While there are some remaining gaps, the country has made significant progress in implementing requirements for VASPs and extending its obligation to freeze assets without delay and prior notice to registered VASPs and their virtual asset transactions.

Conclusion

The report concludes that Mongolia has made significant progress in addressing technical compliance deficiencies and is now rated Largely Compliant with FATF recommendations. The country’s efforts to regulate and monitor VASPs and other initiatives to spread public awareness of the emerging sector have enabled authorities to mitigate money laundering and terrorist financing risks associated with virtual assets in Mongolia.