Financial Crime World

Mongolia Strengthens Anti-Money Laundering and Counter-Terrorism Financing Regulations

Mongolia, sandwiched between Russia and China, has taken noteworthy steps to combat financial crimes and enhance its regulatory framework in accordance with international standards. With an increasing threat of money laundering and terrorism financing, Mongolia’s financial sector has emerged as an alluring target for criminal activities.

Government’s Response and National Strategy

In response to the escalating challenge, the Mongolian government endorsed a National Strategy for Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) on May 17, 2017. This strategy aims to:

  1. Establish and develop a system that conforms to international AML/CFT standards
  2. Ensure the safety and security of the national economic system

Objectives of Mongolia’s New Strategy

The Mongolian strategy encompasses several objectives:

  1. Improved coordination and cooperation: Between relevant agencies and sector-specific policies.
  2. Development of risk assessment methodology: Prevention of financial and non-financial professional service providers from exposure to AML/CFT risks.
  3. Improvement of the legal framework: Capacity building for investigating and detecting financial crimes.

AML/CFT Efforts in Mongolia: Past and Present

Mongolia’s attempts to bolster its AML/CFT framework commenced with the adoption of the Law on Combating Money Laundering and Terrorism Financing in 2006. The country has undergone evaluations by regional and international organizations, including the Asia/Pacific Group on Money Laundering (APG) and the Financial Action Task Force (FATF). Despite making progress by revising its laws in 2013, Mongolia was labeled as a “high risk and non-cooperative country” due to non-compliance with FATF Recommendations. Mongolia was removed from this list in June 2014, following the passage of the Criminal Law and Criminal Procedure Law.

Encouragement from International Organizations

The second-round assessment of Mongolia’s AML/CFT system by the APG transpired in November 2016, with recommendations offered for an action plan over the subsequent 15 months. Organizations such as the IMF and ADB have also urged Mongolia to adhere to FATF Recommendations.

Essential Next Steps for Mongolia

Fulfilling these international expectations is imperative since the FATF Recommendations embody an international standard legal basis and generate a favorable climate for cooperation among countries within the financial sector. The Mongolian National Strategy signifies an important step in the direction of accomplishing this objective and fortifying its AML/CFT capabilities.