Mongolia Struggles to Contain Cybercrime in Finance Industry

Assessing Risk

A recent report by the Financial Action Task Force (FATF) has highlighted concerns over Mongolia’s efforts to combat cybercrime in its finance industry. The country, which is a member of the FATF, has been found to be only “largely compliant” with several key recommendations aimed at preventing money laundering and terrorist financing.

Ineffective Risk Assessment Systems

Mongolia has been criticized for failing to implement effective systems to assess risk and apply a risk-based approach in its financial sector. The country’s lack of a comprehensive framework has left it vulnerable to cyber threats, which are increasingly being used by criminals to launder money and finance terrorism.

Lack of clear guidelines: Mongolia lacks clear guidelines on how to identify and mitigate high-risk transactions.
Inadequate training: Financial institutions in Mongolia often receive inadequate training on how to detect and report suspicious activities.
Limited resources: The country’s financial regulatory bodies often lack the necessary resources to effectively monitor and enforce risk management practices.

National Cooperation and Coordination

The FATF report also noted that Mongolia’s national cooperation and coordination mechanisms are not sufficient to combat cybercrime effectively. The country lacks a clear strategy for sharing information between different agencies and stakeholders, making it difficult to track down and prosecute cybercriminals.

Limited information sharing: Mongolia’s financial regulatory bodies often struggle to share information with other government agencies and international partners.
Inadequate coordination: The country’s response to cyber threats is often disjointed, with different agencies working in isolation rather than as part of a coordinated effort.
Lack of clear objectives: Mongolia lacks clear objectives for its national cooperation and coordination efforts, making it difficult to measure success.

Money Laundering Offence

Mongolia has been found to be largely compliant with FATF Recommendation 3, which requires countries to have a money laundering offence in place. However, the country’s laws do not provide sufficient penalties for those convicted of money laundering, making it an ineffective tool for combating cybercrime.

Inadequate penalties: Mongolia’s laws do not provide adequate penalties for those convicted of money laundering.
Limited resources: The country’s financial regulatory bodies often lack the necessary resources to effectively enforce anti-money laundering regulations.
Lack of transparency: Mongolia’s financial regulatory bodies often struggle to provide transparent information on their efforts to combat money laundering.

Targeted Financial Sanctions

The FATF report also noted that Mongolia has not implemented targeted financial sanctions effectively, particularly with regards to terrorist financing. The country lacks a clear framework for imposing sanctions on individuals and entities suspected of financing terrorism, leaving it vulnerable to abuse.

Inadequate framework: Mongolia lacks a clear framework for imposing targeted financial sanctions.
Limited resources: The country’s financial regulatory bodies often lack the necessary resources to effectively enforce sanctions.
Lack of transparency: Mongolia’s financial regulatory bodies often struggle to provide transparent information on their efforts to impose targeted financial sanctions.

Recommendations

In response to the FATF report, Mongolia’s government is being urged to take immediate action to strengthen its efforts to combat cybercrime in the finance industry. This includes implementing effective risk assessment systems, improving national cooperation and coordination, and strengthening laws and regulations related to money laundering and terrorist financing.

Implement effective risk assessment systems: Mongolia should implement clear guidelines on how to identify and mitigate high-risk transactions.
Improve national cooperation and coordination: The country should develop a clear strategy for sharing information between different agencies and stakeholders.
Strengthen laws and regulations: Mongolia should strengthen its anti-money laundering and counter-terrorist financing laws and regulations.

Stakeholders Respond

Industry experts and stakeholders have welcomed the FATF report as a wake-up call for Mongolia’s government to take more effective action against cybercrime. “Mongolia needs to take a more proactive approach to combating cybercrime in its finance industry,” said one expert. “The country cannot afford to wait any longer to address these threats, which are becoming increasingly sophisticated and widespread.”

What’s Next

In the coming months, Mongolia’s government is expected to respond to the FATF report by implementing new laws and regulations aimed at strengthening its efforts to combat cybercrime in the finance industry. The country will also need to work closely with international partners and stakeholders to share best practices and coordinate efforts to combat these threats.