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Mongolia Strengthens Anti-Money Laundering and Combating the Financing of Terrorism Efforts

Ulaanbaatar, Mongolia

In a significant move to enhance its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime, Mongolia has implemented several key measures to improve information exchange, supervision, and compliance.

Enhanced Information Exchange

According to a recent report, 274 public and private sector institutions are now connected to the data center, which stores information from 108 government organizations. This enables secure, efficient, transparent, and prompt information exchange, accelerating the AML/CFT regime’s effectiveness, particularly for supervisions and investigations.

New Law on Regulating Money Loans

The Parliament of Mongolia has approved the Law on Regulating Money Loans, which applies to entities that provide collateral loans, such as pawnshops. The law requires legal entities with share capital of 100 million MNT or more in provincial areas and 300 million MNT or more in the capital city to be registered with the Financial Regulatory Commission (FRC).

Reporting Entities under AML/CFT Law

As a result of this new law, entities that provide money loan services are now reporting entities under the AML/CFT Law. They are obligated to comply with AML/CFT requirements, including submitting suspicious transaction reports.

Strengthened Sentencing Policy for Corruption Crimes

The Criminal Code has been amended to strengthen sentencing policy for corruption crimes, which are identified as high-risk predicate offenses in Mongolia’s Second National Risk Assessment of Money Laundering and Terrorist Financing (ML/TF). The amendment increases the terms of imprisonment and imposes a lifetime ban on holding public positions.

Improved Report Quality and Timeliness

To improve report quality, timeliness, and effectiveness, FIU-Mongolia has introduced the goAML software developed by the United Nations Office on Drugs and Crimes. The software enables entities from all obligated reporting sectors to submit suspicious, cash, and foreign settlement transaction reports using the system.

Supervisory Authorities’ Efforts

Supervisory authorities have continued conducting ML/TF risk assessments, off-site and on-site supervision, and monitoring compliance with AML/CFT and TFS obligations of regulated reporting entities. Awareness-raising activities have also been organized for the general public.

Revised Regulations for Banks and Non-Banking Sector Reporting Entities

The Bank of Mongolia has revised its Regulations on Conducting Off-Site and On-Site AML/CFT/CPF Supervision of Banks to enable supervisors to update risk assessment tools and procedures, expand the scope of on-site supervision, and conduct risk-focused supervision in a more flexible manner.

Revised Regulation for Non-Banking Sector Reporting Entities

The Financial Regulatory Commission (FRC) has also revised its Regulation on Offsite and Onsite Supervision to Non-Banking Sector Reporting Entities in the Field of Combating ML/TF. The revision improves the comprehensiveness of the regulation, allowing supervisors to effectively apply it across reporting entities from regulated sectors.

Virtual Asset Service Providers (VASPs)

In addition, the FRC has approved eight regulations related to the registration process and other operational and supervisory requirements for VASPs. Eleven VASPs have obtained official registration after meeting the necessary requirements, while 19 VASPs were sent rectification notices for failing to apply for registration within the specified period or not meeting the required registration criteria.

Continuous Monitoring of Registered VASPs

The FRC is continuously monitoring registered VASPs through on-site and off-site supervision and has introduced blockchain analytics programs to effectively monitor compliance with AML/CFT rules.