Mongolian Law on Combating Money Laundering and Terrorism Financing: A Closer Look at the Regulations

Title

Mongolia’s Battle Against Financial Crime: The New Law on Combating Money Laundering and Terrorism Financing

Date

June 1, 2023

Location

Ulaanbaatar, Mongolia

Mongolia’s war on financial crime has advanced significantly with the enactment of the new law on Combating Money Laundering and Terrorism Financing, effective May 31, 2023. In this article, we delve into the essential aspects of this legislation, focusing on its provisions, preventive measures, and the roles of various authorities.

Chapters

CHAPTER ONE: GENERAL PROVISIONS

Purpose and Scope

This legislation aims at preventing money laundering and terrorism financing by establishing a firm legal foundation. It aligns with Mongolia’s Constitution, Criminal Code, and other relevant acts. Moreover, it adheres to international treaties, overriding any conflicting provisions.

Definitions

Key terms are defined, such as money laundering, terrorism financing, cash transactions, non-cash transactions, politically exposed persons, beneficial owners, shell banks, customers, and assets, which are crucial to understanding the legislative framework.

CHAPTER TWO: PREVENTIVE MEASURES

Entities’ Obligations

Banks, non-bank financial institutions, insurance companies, and other financial entities referred to in Article 4.1 must report transactions to the Financial Information Unit. They must also carry out customer due diligence procedures before opening accounts or conducting transactions and verify the identities of beneficial owners. High-risk transactions, including those involving politically exposed persons or suspicious countries, warrant extra scrutiny.

Regulated Activities

The law regulates transactions with specified amounts – cash transactions above MNT 3 million (approximately USD 1 million) and non-cash transactions above MNT 10 million (approximately USD 3.3 million), which require further reporting to the Financial Information Unit.

CHAPTER THREE: RIGHTS AND RESPONSIBILITIES OF STATE COMPETENT AUTHORITIES

Financial Information Unit

The Financial Information Unit, an independent and autonomous agency, receives and analyzes suspicious transaction reports and disseminates information to competent law enforcement authorities. Situated within the Bank of Mongolia, it ensures transparency through reporting to the Governor.

Competent Law Enforcement Authorities

These authorities play a vital role in combating financial crimes. Representatives from these authorities are seconded to the Financial Information Unit to conduct supervision and obtain inquiries under the Unit’s jurisdiction. They can also establish a joint working group to enhance cooperation.

CHAPTER FOUR: MISCELLANEOUS

The Cooperation Council

The Cooperation Council at the Financial Information Unit ensures the implementation of related laws, exchanges information, and mitigates risks. Consisting of various Ministries, institutions, and bodies, it fosters coordinated efforts against financial crimes.

Joint Working Group

The unit and competent law enforcement authorities can establish a joint working group to boost cooperation and effective communication.

Conclusion

Mongolia’s new law on Combating Money Laundering and Terrorism Financing signifies a substantial advancement in the country’s fight against these illicit activities. Its detailed provisions, preventative measures, and well-defined roles of various authorities demonstrate Mongolia’s dedication to upholding international standards and safeguarding its financial system from the perils of financial crime.