Financial Crime World

Mongolia’s Fight Against Money Laundering and Terrorism Financing Faces Challenges

Ulaanbaatar, Mongolia - Mongolia’s efforts to combat money laundering and terrorism financing (AML/CFT) are being hindered by a lack of effective regulations and insufficient cooperation between domestic authorities.

Lack of Effective Regulations

  • The country’s real estate market intermediaries are largely unregulated, with no clear obligations on them to obtain or ensure access to beneficial ownership information.
  • Trust service providers, which play a crucial role in the fight against money laundering and terrorism financing, are not subject to effective oversight by the Financial Regulation Commission (FRC).
  • Beneficial owners of legal persons, including companies and non-profit organizations, are not required to disclose their identities, making it difficult for authorities to track suspicious transactions.

Limited Transparency

  • The registration of legal persons is not transparent, with no requirement for beneficial ownership disclosure.
  • Mongolia’s AML/CFT laws have only recently been introduced, but implementation is still pending.

Challenges in Coordination and Communication

  • Domestic authorities face challenges in coordinating and communicating effectively.
  • While Mongolia has established formal mechanisms for cooperation and coordination, agencies have reported problems with inter-agency collaboration.

Steps Taken by the Financial Intelligence Unit (FIU)

  • The FIU has created a Cooperation Council to ensure implementation of AML/CFT laws and exchange information.
  • However, the council has yet to meet, and its effectiveness remains uncertain.

International Conventions

  • Mongolia has ratified several international conventions aimed at combating money laundering and terrorism financing.
  • However, it is not yet a party to the Palermo Convention, which is considered a cornerstone of global efforts against these crimes.

Conclusion

While Mongolia has made some progress in strengthening its AML/CFT regime, more needs to be done to address the significant gaps and weaknesses that remain.