Mongolia’s Progress in Combating Financial Crimes: APG’s Enhanced Following-Up Report

The Asia/Pacific Group on Money Laundering (APG) has released its 5th Enhanced Following-Up Report (FUR) on Mongolia’s progress in addressing the recommendations issued during its Mutual Evaluation Report (MER) in 2017. In this article, we will discuss the country’s advancements and remaining challenges in enhancing technical compliance with the FATF Recommendations as outlined in the report.

Background

Mongolia’s commitment to effective implementation and enforcement of internationally accepted standards against money laundering, financing of terrorism, and proliferation financing is reassessed in the FUR. The report clarifies that any expression and the cover image are for illustrative purposes only and does not affect any territorial claims or sovereignty.

According to the FUR, during the MER evaluation in 2017, Mongolia was assessed as having largely complied or partially complied with various FATF Recommendations. However, the analysis did not evaluate Mongolia’s effectiveness in implementing these recommendations.

Findings

The FUR report provides an assessment of Mongolia’s current technical compliance ratings and the progress made to improve technical compliance in response to changes in the FATF Recommendations since 2017.

Recommendation 15

One of the revised FATF Recommendations, Recommendation 15, was amended in late 2018 to include requirements related to virtual assets (VA) and virtual asset service providers (VASPs). Mongolia requested a re-rating of R.15 to enhance its technical compliance. The report indicates that the Financial Regulatory Commission (FRC) of Mongolia has conducted risk assessments involving new technologies to manage risks associated with VA activities and VASPs.

However, the report also identifies gaps, including the need for dissuasive monetary penalties for non-compliance and further clarity on risk-based supervision of VASPs and information exchange with international bodies and foreign counterparts to tackle ML/TF risks related to VASPs and VAs.

Progress and Future Plans

Mongolia has made significant progress in addressing the technical compliance deficiencies identified since the amendment of R.15 and its last FUR. In the upcoming months, Mongolia plans to conduct another VASPs risk assessment following the introduction of a registration regime. However, the lack of a timeline for the completion of the registration process and the absence of a legal basis for information exchange might hinder a comprehensive risk assessment.

With the implementation of new regulations and the commitment to enhancing the legal and regulatory framework to mitigate ML/TF risks, Mongolia is well on its way to addressing the identified gaps and strengthening its position in the global fight against financial crimes.

Conclusion

The FUR reports that Mongolia appears to have made significant progress in addressing the technical compliance deficiencies identified during the initial MER and subsequent follow-up reports. However, some minor gaps still remain, including the completion of the full VASPs registration process and further clarity on risk-based supervision and dissuasive monetary penalties for non-compliance. Despite these challenges, Mongolia’s persistent efforts toward strengthening its AML/CFT framework demonstrate its commitment to combating financial crimes effectively.