Financial Crime World

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Mongolia’s Anti-Money Laundering and Counter-Terrorist Financing Efforts: A Mixed Bag

A recent assessment by international experts has revealed that Mongolia’s efforts to combat money laundering (ML) and terrorist financing (TF) are incomplete, with significant gaps in its legal framework and limited expertise among relevant agencies.

Assessment Highlights

While Mongolia has made progress in implementing anti-money laundering (AML) and counter-terrorist financing (CFT) measures, the assessment highlights several areas of concern:

  • The country’s National Risk Assessment (NRA), a critical tool for understanding ML and TF threats, was found to be incomplete and lacked a comprehensive assessment of Mongolia’s ML risk.
  • The NRA focused primarily on ML threats, with no clear identification or analysis of TF threats and vulnerabilities.
  • The private sector was underrepresented in the NRA process, with limited involvement beyond providing data and participating in a few workshops.

Significant Gaps

Mongolia also faces significant PF-related sanctions evasion risks due to its proximity to North Korea and Iran. The country has limited trade with these countries, but there are known legal entities operating in Mongolia with direct links to the Democratic Republic of North Korea (DPRK) and shares owned by Mongolian companies in DPRK state-owned enterprises.

The assessment team noted that Mongolia’s legal framework related to TF is lacking, with significant gaps in the country’s laws and regulations. The National Cooperation Council (NCC), responsible for ensuring the implementation of Mongolia’s AML/CFT regime, has developed a draft national AML/CFT strategy, but it was not yet in force or informed by the NRA at the time of the assessment.

Coordination and Cooperation

The team also highlighted that coordination and cooperation on PF-related issues is absent in Mongolia. Overall, while Mongolia has made progress in implementing AML/CFT measures, the country’s efforts are incomplete, with significant gaps in its legal framework and limited expertise among relevant agencies.

Key Recommendations

To improve its AML/CFT regime, Mongolia should:

  • Complete a comprehensive National Risk Assessment (NRA) that identifies and analyzes ML and TF threats and vulnerabilities.
  • Strengthen private sector involvement in the NRA process to improve understanding of ML/TF risks.
  • Enhance legal framework related to TF, including developing laws and regulations to combat TF.
  • Improve coordination and cooperation on PF-related issues, including establishing a dedicated mechanism for PF sanctions evasion risks.
  • Increase financial intelligence gathering and analysis to better understand ML and TF threats.

By addressing these recommendations, Mongolia can improve its AML/CFT regime and reduce the risk of being used as a conduit for illegal activities.