Mongolia’s Progress in Combating Money Laundering: APG’s Latest Evaluation
Fifth Enhanced Follow-Up Report on Mongolia’s Technical Compliance
The Asia-Pacific Group on Money Laundering (APG) has published its fifth follow-up report (FUR) on Mongolia’s progress in addressing technical compliance deficiencies. The report analyzes the progress of Mongolia in addressing the technical compliance requirements of the recommendations re-rated since the Mutual Evaluation Report (MER) was adopted in September 2017.
Table: Mongolia’s Current and Re-rated Ratings
| R. Rating | MER 2017 | FUR 2021 |
|---|---|---|
| 1 | PC | LC |
| 2 | PC | C |
| 3 | PC | LC |
| 4 | LC | LC |
| 5 | LC | LC |
| 6 | PC | LC |
| 7 | NC | LC |
| 8 | PC | PC |
| 9 | LC | C |
| 10 | LC | C |
| 11 | C | C |
| 12 | LC | PC |
| 13 | LC | PC |
| 14 | PC | C |
| 15 | LC | PC |
| 16 | LC | PC |
| 17 | PC | LC |
| 18 | LC | PC |
| 19 | PC | LC |
| 20 | NC | LC |
| 21 | NC | LC |
Findings and Progress
The assessment of Mongolia’s request for technical compliance re-ratings and the preparation of this report were conducted by an expert as part of Mongolia’s Enhanced Follow-Up. Mongolia has made significant progress in implementing new requirements as FATF recommendations have changed.
Progress in addressing recommendation 15
Mongolia’s progress towards fully implementing Recommendation 15 was evaluated in the 2020 and 2021 FUR, respectively. Following Mongolia’s efforts, its rating for Recommendation 15 was upgraded to LC.
Progress in improving technical compliance
To address the technical compliance deficiencies, Mongolia has taken several steps towards implementing new requirements:
- New technologies and virtual asset service providers (VASPs): The Law on Combating Money Laundering and Terrorism Financing (AML/CFT Law) and the AML/CFT Preventive Measures Regulation (PMR) now require assessments of risks associated with new technologies and VASPs.
- Risk assessments: Mongolia requires financial institutions (FIs) to assess risks related to virtual assets activities and VASPs prior to the launch/use of these products, practices, and technologies. FIs are obligated to take appropriate measures to manage and mitigate risks related to virtual assets once identified.
- VASP sector development: The VASP sector is at an early stage of development in Mongolia. A VASP risk assessment found medium-low ratings for ML and TF risks, but concerns exist over the accuracy of the 2020 assessment due to the lack of registration regime and legal framework for the sector.
- VASP Risk Assessment Working Group: Following the risk assessment, Mongolia formed a VASP Risk Assessment Working Group through the Financial Stability Council, consisting of 12 government agencies including the regulator, the FRC, to regularly assess and identify emerging risks in the sector. The working group is using the World Bank’s recently revised methodology to develop and conduct an updated sectoral risk assessment.
- Preventing or mitigating ML/TF risks: Mongolia has implemented measures to prevent or mitigate ML/TF risks from VA activities and VASPs, such as enacting the Law on Virtual Asset Service Providers (VASP Law) on December 17, 2021, regulating VASPs as reporting entities for AML/CFT purposes, and developing a Supervision Framework for FRC-regulated sectors, including VASPs.
Conclusion
Mongolia has made considerable progress in improving its technical compliance with the FATF Recommendations since the adoption of the MER in 2017. The APG welcomes Mongolia’s ongoing commitment to achieving international standards for combating money laundering, financing of terrorism, and proliferation financing.