Financial Crime World

Mongolia Grapples with Corruption: Higher Risks Include Fraud, Environmental Crimes, Tax Evasion and Corruption

Ulaanbaatar, Mongolia - The Financial Action Task Force (FATF) has highlighted higher risks of fraud, environmental crimes, tax evasion, and corruption in its latest report on Mongolia. Despite efforts to combat corruption, the country still faces significant challenges.

Anti-Corruption Laws in Place

Mongolia’s anti-corruption legislation is primarily found in the Criminal Code and the Anti-Corruption Law, which prohibit abuse of functions, active and passive bribery. The main pillars of the anti-corruption legal framework include:

  • 1990 law on political parties
  • 1996 law on anti-corruption (amended in 2007)
  • State Audit Law

Taxation System Transparent

Mongolia’s taxation system is characterized by transparency, with regulations governed by:

  • General Taxation Law
  • Law on Custom Tariffs and Duties

Online tax reporting has reduced potential corruption risks.

Auditing Framework in Place

The Mongolian legal framework for auditing consists of:

  • Law on Auditing
  • Company Law
  • Banking Law
  • Law on Insurance
  • State Audit Law

International Financial Reporting Standards are required for publicly listed companies. However, many private companies fail to comply with accounting standards due to difficulties conducting audits and conversions.

Institutional Framework

The Independent Authority Against Corruption (IAAC) is the key anti-corruption agency in Mongolia, established in 2007. Its responsibilities include:

  • Investigating corruption cases
  • Collecting asset declarations
  • Running education and prevention programs
  • Having jurisdiction over abuse of power or office by state officials

Challenges Remain

Despite efforts to combat corruption, many challenges persist. These include:

  • Political parties lacking transparency in their financing
  • The Electoral Commission being accused of gerrymandering electoral districts
  • Rising costs of running for office disproportionately affecting small parties
  • Public perceptions surveys identifying political parties as one of the most corrupt institutions in Mongolia

Roadmap to Combat Corruption

To combat corruption effectively, Mongolia needs to address these challenges and strengthen its anti-corruption institutions. This includes:

  • Improving transparency in political party financing
  • Enhancing electoral integrity
  • Increasing public trust in government institutions