Financial Crime World

Mongolia’s Financial Sector Lags Behind in Anti-Money Laundering, Terrorist Financing Efforts

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Struggling to Implement Effective Measures

A recent report from the Asia-Pacific Group on Money Laundering (APG) has highlighted that Mongolia is struggling to implement effective anti-money laundering (AML) and combating terrorist financing (CFT) measures. The country’s financial sector is at risk of being exploited by criminal organizations and terrorist networks.

Progress, but Significant Gaps Remain

The APG’s latest Follow-up Report (FUR) shows that Mongolia has made some progress in addressing its technical compliance with AML/CFT standards. However, significant gaps remain, including:

  • Failure to regulate virtual asset service providers (VASPs), including cryptocurrencies
  • Inadequate supervision of financial institutions
  • Lack of effective regulations for digital currency exchanges

Urgent Action Needed

“Mongolia needs to take urgent action to strengthen its AML/CFT framework,” said an APG official. “The country is at risk of being exploited by criminal organizations and terrorist networks.”

Key Findings and Recommendations

Virtual Asset Service Providers (VASPs)

  • Mongolia has failed to regulate VASPs, including cryptocurrencies
  • This lack of regulation has led to a proliferation of unregulated digital currency exchanges

Financial Institutions

  • Authorities have not conducted regular on-site inspections of financial institutions
  • This inadequate supervision allows potential money laundering and terrorist financing activities to go undetected

Recommendations

  • Implement a comprehensive regulatory framework for VASPs
  • Strengthen the country’s financial intelligence unit
  • Improve supervision of financial institutions

Enhanced Follow-up and Next Steps

Mongolia is currently in enhanced follow-up with the APG, which means it will be closely monitored for its progress in implementing AML/CFT reforms. The country’s next FUR is due in February 2022.

The full report can be accessed on the APG website.