Financial Crime World

Here is the converted article in markdown format:

Money Laundering and Financing of Terrorism: A Growing Concern in Mongolia

Mongolia’s economic growth, fueled by the mining sector, has increased its vulnerability to money laundering and financing of terrorism (ML/TF) threats. According to a recent report, the country’s total economy reached $11.8 billion in 2015, ranking it 129th globally.

A Growing Concern

The report highlights that Mongolia’s small population and financial sector make it relatively low-risk compared to other countries. However, the increasing number of people crossing its borders, particularly from China and Russia, has raised concerns about the country’s exposure to external ML/TF threats.

Key Areas of Risk

Tourism, contracted labor, investment, trade, remittances, and loan movements are among the key areas that pose a risk to Mongolia’s financial stability. The report notes that:

  • 46.1% of border-crossing passengers in 2015 were Chinese citizens
  • 15.7% were Russian citizens
  • 10.5% were South Korean citizens
  • 4.2% were Japanese citizens
  • 3.3% were American citizens
  • 3.2% were Kazakh citizens

Foreign Trade and Money Laundering

The study also found that foreign trade is a common channel for money laundering at the international level. Over-invoicing of products in letters of credit or trade contracts is a popular method used by criminals to transfer illegal funds abroad.

Strengthening Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Measures

In response, Mongolia’s financial sector has taken steps to strengthen its AML/CFT measures. The country’s banking sector, which accounts for 95.7% of total assets, has implemented stricter regulations and monitoring systems to detect suspicious transactions.

Recommendations

To reduce its risk exposure to money laundering and financing of terrorism, we recommend:

  • Enhancing border control measures to prevent illegal activities
  • Implementing stricter regulations on foreign trade and transactions
  • Increasing public awareness about the risks of ML/TF
  • Strengthening cooperation between financial institutions, law enforcement agencies, and regulatory bodies
  • Developing a comprehensive AML/CFT strategy to address emerging threats

By implementing these recommendations, Mongolia can reduce its risk exposure to money laundering and financing of terrorism, ensuring a stable and secure financial environment for its citizens and businesses.