Financial Crime World

Mongolian Anti-Money Laundering Regulations: Combatting Illicit Finance in Ulaanbaatar

In the heart of Mongolia’s capital city, Ulaanbaatar, a significant legislative development is underway. On May 31, 2013, the Mongolian Parliament, or Great Khural, passed the new Law on Combating Money Laundering and Terrorism Financing. This new legislation is designed to fortify Mongolia’s legal framework against illicit finance, a problem of growing concern for the global community.

Article 1.1: The importance of this law in preventing money laundering and terrorism financing, and creating a legal basis for implementing preventive measures.

Compliance with the Constitution and Other Legal Acts: The law is compliant with the Constitution and various other legal acts, as outlined in Article 2.1.

Precedence of International Treaties: In cases of inconsistencies with international treaties, the provisions of the treaties will take precedence, as stipulated in Article 2.2.

Definitions (Article 3)

Money Laundering: Acquiring, converting, or transferring assets knowing they are proceeds from crime.

Terrorism Financing: Providing, collecting, or transferring assets to finance terrorist activities, either directly or indirectly.

Cash Transactions: Transactions involving physical currency.

Non-Cash Transactions: Transactions not involving physical currency.

Preventive Measures (Chapter Two)

Entities Subject to Reporting Requirements: Banks, non-bank financial institutions, insurance companies, investment funds, licensed securities market entities, savings and credit cooperatives, real estate agents, notaries, and other specified organizations.

Anonymous or Numbered Accounts: These entities must not open anonymous or numbered accounts or make transactions from or to such accounts.

Customer Information Verification: Entities are required to identify and verify customer information during several circumstances, such as:

  • Before establishing business relations
  • When conducting large or irregular transactions
  • Whenever there is doubt about the accuracy of previously obtained information

Special Attention: Entities must pay special attention to transactions conducted using new or developing technologies, involve politically exposed persons, or are conducted via strategically deficient countries.

Reporting Requirements: Entities must report certain transactions - both cash and non-cash transactions exceeding 20 million togrog (approximately USD 7.3 million) - to the Financial Information Unit (FIU) within five working days. Suspicious transactions or transactions involving money laundering or terrorism financing must be reported immediately to the FIU.

Record Retention: The new law requires entities to retain customer information and transaction records for at least five years after the transaction date and closure of the account. Information on suspicious transactions must be reported to the FIU.

Account Monitoring and Sanctions: The agency may monitor suspicious accounts and, if necessary, freeze or suspend transactions. The provision of reports to the FIU and competent authorities is protected by banking and professional confidentiality.

Stay tuned for further articles exploring the new law’s implications, potential benefits, and challenges for Mongolia in its ongoing efforts to combat money laundering and terrorism financing.