Financial Crime World

Money Laundering and Terrorism Financing Threats in Mongolia: A National Risk Assessment

Amidst growing concerns over money laundering (ML) and terrorism financing (TF) threats worldwide, Mongolia conducted its first national risk assessment in recent years. This report outlines the key findings of the assessment, aiming to help Mongolian authorities combat these illicit activities and ensure compliance with international standards set by organizations like the Financial Action Task Force (FATF).

Economic Situation and Criminal Activities

In the past decade, theft has been the most common crime committed in Mongolia, accounting for 65% of all recorded offenses. However, in terms of economic damage, fraud emerges as the most harmful, causing an estimated 35% of total harm. However, corruption, environmental crimes, and tax evasion are also significant causes for concern.

The assessment highlighted the need for increased focus on detecting and investigating these latent crimes and their associated proceeds.

Most Vulnerable Sectors

Banking sector

Accounting for the vast majority of the financial sector, banks in Mongolia are a primary target for money laundering activities due to their significant influence and extensive networks.

Real Estate sector

Vulnerability in the real estate sector arises from the lack of centralized control and the limited role of real estate brokers in purchasing or selling properties.

FATF and APG Evaluation

The Financial Action Task Force (FATF) and the Asia Pacific Group on Money Laundering (APG) have initiated a mutual evaluation process for Mongolia. Mongolia’s risk rating and subsequent strategy to counter these threats will be determined during this evaluation, which could influence its standing in the global financial system.

External Threats

External risks posed by neighboring countries such as China, Russia, and South Korea remain significant due to their proximity and economic interconnectedness. These countries have their own money laundering and terrorism financing issues, making Mongolia a potential transit route for illicit funds.

Addressing Vulnerabilities

Government authorities, international organizations, and local businesses are encouraged to implement measures to address these vulnerabilities and prevent the flow of illicit funds. The Mongolian government, in collaboration with these entities, should continue to invest in improved legislation, better enforcement, and increased public awareness to tackle ML and TF threats effectively.

Keywords

  • Money laundering
  • Terrorism financing
  • Mongolia
  • National Risk Assessment
  • FATF
  • APG
  • Economic Situation
  • Legal and Institutional Framework
  • Risk of Money Laundering and Terrorism Financing Crime
  • Banks
  • Real Estate Sector
  • Designated Non-Financial Businesses and Professions
  • External Threats.