Title: Financial Crimes on the Rise: A Look into Money Laundering and Terrorism Financing Threats in Mongolia
Mongolia, a landlocked country in Asia, faces significant financial crimes, including money laundering and terrorism financing. As a member of the Asia Pacific Group on Money Laundering (APG), Mongolia has taken steps to address these issues through comprehensive risk assessments.
National Risk Assessment
In late 2015, the Bank of Mongolia, in collaboration with various government agencies, conducted the first-ever National Risk Assessment (NRA) on money laundering and terrorism financing. The objective was to:
- Identify and evaluate the risks
- Assist regulatory, supervisory, and law enforcement authorities
- Formulate evidence-based policies
This assessment followed the Financial Action Task Force (FATF) methodology, using standardized forms and analysis methods. Data collection included crime statistics, legislation, financial institution information, and risk profiles of designated non-financial business sectors (DNFBPs).
Prevalent Crimes and Risks
During the assessment process, the following were identified as the most prevalent types of registered crimes:
- Fraud
- Theft
- Violations of banking legislation
However, incompletely filed or not filed crimes like corruption, environmental crime, and narcotics offenses often go unreported.
Among the money laundering crimes, the following pose significant risks:
- Fraud
- Crimes against the environment
- Tax evasion
- Corruption
High-risk areas include the transportation of illegal funds from countries like China, Russia, and South Korea.
Sectoral Risks
The banking sector, which constitutes a large portion of Mongolia’s financial sector, is the sector most exposed to money laundering risks. Another high-risk sector is the real estate sector due to its vulnerabilities.
Professionals in fields such as notary, accountancy, auditing, law, and advocacy were identified as having moderate money laundering risks. The real estate and construction sectors are also at high risk, particularly in regards to brokerages and sales transactions.
Opportunities for Criminals
Mongolia’s economy, primarily based on natural resources, mining, and agriculture, offers considerable opportunities for criminals seeking to launder illicit funds or profit from these sectors. Weak supervision and inefficient accountability mechanisms exacerbate these risks.
Despite efforts to fight corruption, criminals continue to employ sophisticated methods:
- Use of offshore financial centers and tax havens
To combat these financial crimes, Mongolia must:
- Strengthen its legal and institutional frameworks
- Improve risk assessment capabilities
- Broaden international cooperation
- Enhance law enforcement and financial intelligence agencies’ expertise
- Increase public awareness
- Promote greater transparency and accountability
In conclusion, Mongolia’s first national risk assessment is a crucial milestone in the country’s fight against financial crimes. By identifying risks, strengthening frameworks, and promoting cooperation, Mongolia can mitigate the threat and protect its financial sector and economy.