Financial Crime World

Mongolia’s AML/CFT Efforts Hampered by Lack of Framework for Foreign Trusts

ULAANBAATAR, MONGOLIA - A recent report by the International Cooperation Review Group (ICRG) highlights significant gaps in Mongolia’s anti-money laundering and counter-terrorism financing (AML/CFT) regime. The report emphasizes that foreign trusts are not a significant feature in the Mongolian economy, but warns that the country has not assessed the money laundering/terrorist financing risks associated with them.

Coordination and Policy Setting

Mongolia’s AML/CFT framework is hindered by a lack of coordination and policy setting. Although the country completed its first Money Laundering and Terrorist Financing Risk Assessment (NRA) in 2016, the assessment was limited in scope and did not provide a comprehensive picture of Mongolia’s ML/TF risks.

  • The report notes that private sector involvement in the NRA process was limited, with only larger banks providing data and participating in workshops.
  • This lack of engagement has resulted in a negligible understanding of Mongolia’s ML/TF risk among the private sector.

Financial Intelligence and Coordination

The ICRG found that Mongolia’s financial intelligence is not being used effectively to identify and disrupt money laundering and terrorist financing activities. The country’s Financial Intelligence Unit (FIU) operational analysis is limited, and there is a lack of coordination between government agencies and the private sector on ML/TF issues.

The report highlights Mongolia’s exposure to proliferation finance-related sanctions evasion. The country has a significant number of citizens working in industries linked to North Korea, and there are legal entities operating in Mongolia with direct links to the DPRK.

Recommendations for Improvement

Overall, the ICRG assessment concluded that Mongolia’s AML/CFT regime is not effective, and that the country needs to improve its risk assessments, coordination mechanisms, and private sector engagement. The report made several recommendations for Mongolia to address these gaps and strengthen its AML/CFT framework.

By implementing these recommendations, Mongolia can enhance its ability to combat money laundering and terrorist financing, and demonstrate its commitment to international cooperation in this area.