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FATF Statement re AML Strategic Deficiencies:
Date: 16 February 2012
In June 2011, Mongolia made a high-level political commitment to
work with the FATF and APG to address its strategic AML/CFT
deficiencies. Since October 2011, Mongolia has taken steps
towards improving its AML/CFT regime, including by enhancing
capacity building of the FIU and the supervisory authorities.
However, the FATF has determined that strategic AML/CFT
deficiencies remain. Mongolia should continue to work on
implementing its action plan to address these deficiencies,
including by: (1) adequately criminalising money laundering and
terrorist financing (Recommendation 1 and Special
Recommendation II); (2) establishing and implementing adequate
procedures to identify and freeze terrorist assets (Special
Recommendation III); (3) establishing adequate procedures for
the confiscation of funds related to money laundering
(Recommendation 3); (4) establishing suspicious transaction
reporting requirements (Recommendation 13 and Special
Recommendation IV); and (5) demonstrating effective regulation
of money service providers. The FATF encourages Mongolia to
address its remaining deficiencies and continue the process of
implementing its action plan.
____________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
Mongolia is not a financial center. There are few financial and
economic crimes, although numbers have increased in the last
five years. Mongolia is vulnerable to a low grade of transnational
crime due to the growth in tourism, investment, and remittances
from abroad in recent years, but thus far this vulnerability has not
translated into a greater incidence of such crime. The increase in
reports of suspicious transactions is more likely a product of the
increasing effectiveness and experience of the financial
intelligence unit (FIU). Mongolia’s limited capacity to monitor its
extensive borders with Russia and China is a liability in the fight
against smuggling and narcotics, but drug use and trafficking
remain limited and unsophisticated. There is a black market for
smuggled goods, but this is largely tied to tax avoidance rather
than drug trafficking. There are no indications that international
narcotics traffickers exploit the banking system, and no instances
of terrorist financing have been reported.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: NO civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: YES
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, non-bank financial institutions, savings
and credit cooperatives, insurance companies, securities dealers,
foreign exchange units, pawnshops, and casinos (though casinos
are currently prohibited in Mongolia)
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, non-bank financial institutions, savings
and credit cooperatives, insurance companies, securities dealers,
foreign exchange units pawnshops, and casinos (though casinos
are currently prohibited in Mongolia)
Number of STRs received and time frame: 25 (January 1 –
December 15, 2010)
Number of CTRs received and time frame: 319,000 (January 1 –
Dec 15, 2010)
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: Two (January 1 – December 15, 2010)
Convictions: None (January 1 – December 15, 2010)
Assets forfeited: criminally: None civilly: None
RECORDS EXCHANGE MECHANISM:
With U.S.: NO
With other governments/jurisdictions: YES
Mongolia is a member the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here:
http://www.apgml.org/documents/docs/17/Mongolia%20Mutual%
20Evaluation%202007%20-%20Final%20.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The Mongolian FIU expanded international cooperation, signing
MOUs with the FIUs of Malaysia, Korea, Nepal, and Afghanistan in
2010. The FIU shared 20 reports (ten incoming and ten outgoing)
with foreign FIUs in 2010.
The increasing financial flows in advance of an expected mining-
driven boom create a distinct challenge to the Mongolian FIU.
Although the Parliament passed a law on December 24, 2009,
bringing AML/CFT efforts into harmony with international
guidelines, it is not clear that the Government of Mongolia has the
capacity fully to enforce this law. While highly professional, the
FIU appears under-staffed, and coordination with other law
enforcement organizations reportedly remains deficient. Although
two cases were opened during the year, the lack of a single
successful prosecution to date illustrates the enforcement
problem.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Mongolia is a source country, and to a much lesser extent, a
destination for men, women, and children who are subjected to
sex trafficking and forced labor. Mongolian men, women, and
children are found in these conditions in China, Macau, Malaysia,
South Korea, and Hong Kong. Mongolian men and women are
found in conditions of forced labor in Turkey, Kazakhstan, the
Czech Republic, and Poland. One Mongolian victim was
repatriated from Ireland during the reporting period. According to
a leading anti-trafficking NGO in Mongolia, China was the primary
source of repatriated Mongolian victims. Visa-free travel of
Mongolians to Turkey has resulted in a significant increase in the
number of both labor and sex trafficking cases involving
Mongolian labor migrants in Turkey. There remain concerns
about involuntary child labor in the informal construction, mining,
and industrial sectors, where children are vulnerable to injury and
face severe health hazards. The problem of Mongolian women
subjected to conditions of involuntary servitude after engaging in
brokered marriages – mainly to South Korean men – continues.
There is mounting evidence of Chinese laborers, usually in mining
and construction work, being expelled from Mongolia for visa
violations without being compensated for their work, an indicator
of possible human trafficking. Approximately 525 North Koreans
are employed in Mongolia as contract laborers, more than double
the number reported last year, despite concerns that North
Korean workers overseas do not appear to be free to leave their
employment, have their freedom of movement and communication
restricted, and receive only an unknown fraction of the money
paid to the North Korean government for their work.
Many Mongolian victims originally sought employment through
fraudulent newspaper or television advertisements, and traffickers
continue to use technology like “TV Chat” to lure victims. Many
victims are recruited by acquaintances, friends, and family, and
victims often have their travel documents confiscated. Anecdotal
reports continue to indicate that South Korean and Japanese
tourists engage in child sex tourism in Mongolia.
The Government of Mongolia does not fully comply with the
minimum standards for the elimination of trafficking; however, it is
making significant efforts to do so. The government
acknowledged a serious problem of the trafficking of Mongolian
women and girls abroad and took tangible steps to address this,
though it did not acknowledge or adequately address the problem
of Mongolian women and children trafficked within the country,
Mongolian men subjected to forced labor abroad, or North
Korean, Chinese, and other foreign workers subjected to
conditions of forced labor in Mongolia. The government’s lack of
adequate guidance on the use of the amended anti-trafficking
statute continues to cause courts to charge trafficking offenders
under a lesser offense, resulting in shorter sentences for
convicted offenders. Corruption among law enforcement
personnel remains a key barrier to anti-trafficking progress.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
Although there were no known terrorist groups operating in
Mongolia and no known bases of support, Mongolian government
officials cited more than 6,000 kilometers of porous borders and
easy entry for foreign travelers as conditions that terrorists could
exploit, and moved to increase awareness of terrorism and to
consider new laws. Throughout the year, eight senior personnel
attended counterterrorism-related training at the Asian Pacific
Center for Security Studies in Honolulu and at the Marshall Center
in Germany.
The Mongolian police, the Ministry of Justice, and the General
Intelligence Agency’s counterterrorism branch cooperated with
their U.S. counterparts on counterterrorism issues. As a result of
resource and technical limitations, however, Mongolian
counterterrorism law enforcement capacities remained modest.
Mongolia continued to contribute to international counterterrorism
efforts. In support of Operation Enduring Freedom, the 130
member Mongolian Expeditionary Task Force and 23-strong
Mongolian Technical Training and Maintenance Team arrived in
Afghanistan in November. They will provide fixed site security at
Camp Eggers in Kabul and artillery training and maintenance at
Camp Phoenix. In addition to supporting Operation Enduring
Freedom, Mongolia also supported the NATO-led International
Security Assistance Force. On November 28, the Mongolian
Armed Forces deployed an additional platoon of approximately 40
soldiers to support the German contingent in northern
Afghanistan. This brings the total number of Mongolians deployed
to Afghanistan to almost 200.
Date: 16 February 2012
In June 2011, Mongolia made a high-level political commitment to
work with the FATF and APG to address its strategic AML/CFT
deficiencies. Since October 2011, Mongolia has taken steps
towards improving its AML/CFT regime, including by enhancing
capacity building of the FIU and the supervisory authorities.
However, the FATF has determined that strategic AML/CFT
deficiencies remain. Mongolia should continue to work on
implementing its action plan to address these deficiencies,
including by: (1) adequately criminalising money laundering and
terrorist financing (Recommendation 1 and Special
Recommendation II); (2) establishing and implementing adequate
procedures to identify and freeze terrorist assets (Special
Recommendation III); (3) establishing adequate procedures for
the confiscation of funds related to money laundering
(Recommendation 3); (4) establishing suspicious transaction
reporting requirements (Recommendation 13 and Special
Recommendation IV); and (5) demonstrating effective regulation
of money service providers. The FATF encourages Mongolia to
address its remaining deficiencies and continue the process of
implementing its action plan.
____________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2011:
Mongolia is not a financial center. There are few financial and
economic crimes, although numbers have increased in the last
five years. Mongolia is vulnerable to a low grade of transnational
crime due to the growth in tourism, investment, and remittances
from abroad in recent years, but thus far this vulnerability has not
translated into a greater incidence of such crime. The increase in
reports of suspicious transactions is more likely a product of the
increasing effectiveness and experience of the financial
intelligence unit (FIU). Mongolia’s limited capacity to monitor its
extensive borders with Russia and China is a liability in the fight
against smuggling and narcotics, but drug use and trafficking
remain limited and unsophisticated. There is a black market for
smuggled goods, but this is largely tied to tax avoidance rather
than drug trafficking. There are no indications that international
narcotics traffickers exploit the banking system, and no instances
of terrorist financing have been reported.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: All serious crimes
Legal persons covered: criminally: NO civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: YES
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
(Please refer to the Department of State’s Country Reports on
Terrorism, which can be found here: http://www.state.
gov/s/ct/rls/crt/)
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Banks, non-bank financial institutions, savings
and credit cooperatives, insurance companies, securities dealers,
foreign exchange units, pawnshops, and casinos (though casinos
are currently prohibited in Mongolia)
Enhanced due diligence procedures for PEPs: Foreign: YES
Domestic: YES
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Banks, non-bank financial institutions, savings
and credit cooperatives, insurance companies, securities dealers,
foreign exchange units pawnshops, and casinos (though casinos
are currently prohibited in Mongolia)
Number of STRs received and time frame: 25 (January 1 –
December 15, 2010)
Number of CTRs received and time frame: 319,000 (January 1 –
Dec 15, 2010)
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: Two (January 1 – December 15, 2010)
Convictions: None (January 1 – December 15, 2010)
Assets forfeited: criminally: None civilly: None
RECORDS EXCHANGE MECHANISM:
With U.S.: NO
With other governments/jurisdictions: YES
Mongolia is a member the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Its most recent mutual evaluation can be found
here:
http://www.apgml.org/documents/docs/17/Mongolia%20Mutual%
20Evaluation%202007%20-%20Final%20.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
The Mongolian FIU expanded international cooperation, signing
MOUs with the FIUs of Malaysia, Korea, Nepal, and Afghanistan in
2010. The FIU shared 20 reports (ten incoming and ten outgoing)
with foreign FIUs in 2010.
The increasing financial flows in advance of an expected mining-
driven boom create a distinct challenge to the Mongolian FIU.
Although the Parliament passed a law on December 24, 2009,
bringing AML/CFT efforts into harmony with international
guidelines, it is not clear that the Government of Mongolia has the
capacity fully to enforce this law. While highly professional, the
FIU appears under-staffed, and coordination with other law
enforcement organizations reportedly remains deficient. Although
two cases were opened during the year, the lack of a single
successful prosecution to date illustrates the enforcement
problem.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2)
Mongolia is a source country, and to a much lesser extent, a
destination for men, women, and children who are subjected to
sex trafficking and forced labor. Mongolian men, women, and
children are found in these conditions in China, Macau, Malaysia,
South Korea, and Hong Kong. Mongolian men and women are
found in conditions of forced labor in Turkey, Kazakhstan, the
Czech Republic, and Poland. One Mongolian victim was
repatriated from Ireland during the reporting period. According to
a leading anti-trafficking NGO in Mongolia, China was the primary
source of repatriated Mongolian victims. Visa-free travel of
Mongolians to Turkey has resulted in a significant increase in the
number of both labor and sex trafficking cases involving
Mongolian labor migrants in Turkey. There remain concerns
about involuntary child labor in the informal construction, mining,
and industrial sectors, where children are vulnerable to injury and
face severe health hazards. The problem of Mongolian women
subjected to conditions of involuntary servitude after engaging in
brokered marriages – mainly to South Korean men – continues.
There is mounting evidence of Chinese laborers, usually in mining
and construction work, being expelled from Mongolia for visa
violations without being compensated for their work, an indicator
of possible human trafficking. Approximately 525 North Koreans
are employed in Mongolia as contract laborers, more than double
the number reported last year, despite concerns that North
Korean workers overseas do not appear to be free to leave their
employment, have their freedom of movement and communication
restricted, and receive only an unknown fraction of the money
paid to the North Korean government for their work.
Many Mongolian victims originally sought employment through
fraudulent newspaper or television advertisements, and traffickers
continue to use technology like “TV Chat” to lure victims. Many
victims are recruited by acquaintances, friends, and family, and
victims often have their travel documents confiscated. Anecdotal
reports continue to indicate that South Korean and Japanese
tourists engage in child sex tourism in Mongolia.
The Government of Mongolia does not fully comply with the
minimum standards for the elimination of trafficking; however, it is
making significant efforts to do so. The government
acknowledged a serious problem of the trafficking of Mongolian
women and girls abroad and took tangible steps to address this,
though it did not acknowledge or adequately address the problem
of Mongolian women and children trafficked within the country,
Mongolian men subjected to forced labor abroad, or North
Korean, Chinese, and other foreign workers subjected to
conditions of forced labor in Mongolia. The government’s lack of
adequate guidance on the use of the amended anti-trafficking
statute continues to cause courts to charge trafficking offenders
under a lesser offense, resulting in shorter sentences for
convicted offenders. Corruption among law enforcement
personnel remains a key barrier to anti-trafficking progress.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
Although there were no known terrorist groups operating in
Mongolia and no known bases of support, Mongolian government
officials cited more than 6,000 kilometers of porous borders and
easy entry for foreign travelers as conditions that terrorists could
exploit, and moved to increase awareness of terrorism and to
consider new laws. Throughout the year, eight senior personnel
attended counterterrorism-related training at the Asian Pacific
Center for Security Studies in Honolulu and at the Marshall Center
in Germany.
The Mongolian police, the Ministry of Justice, and the General
Intelligence Agency’s counterterrorism branch cooperated with
their U.S. counterparts on counterterrorism issues. As a result of
resource and technical limitations, however, Mongolian
counterterrorism law enforcement capacities remained modest.
Mongolia continued to contribute to international counterterrorism
efforts. In support of Operation Enduring Freedom, the 130
member Mongolian Expeditionary Task Force and 23-strong
Mongolian Technical Training and Maintenance Team arrived in
Afghanistan in November. They will provide fixed site security at
Camp Eggers in Kabul and artillery training and maintenance at
Camp Phoenix. In addition to supporting Operation Enduring
Freedom, Mongolia also supported the NATO-led International
Security Assistance Force. On November 28, the Mongolian
Armed Forces deployed an additional platoon of approximately 40
soldiers to support the German contingent in northern
Afghanistan. This brings the total number of Mongolians deployed
to Afghanistan to almost 200.
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*Please note that FATF deems that a country has significant aml deficiencies if any
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| MONGOLIA |
| KnowYourCountry |
|
_________________________________________________________
AML News / Relevant Information:
June 1, 2011 - AML/CFT information extracted from 2011 IMF Financial
System Stability Assessment on Mongolia: -
Read Statement (internal link)
Links:
Worldwide AML Legislation (International Bar Association)
AML News / Relevant Information:
June 1, 2011 - AML/CFT information extracted from 2011 IMF Financial
System Stability Assessment on Mongolia: -
Read Statement (internal link)
Links:
Worldwide AML Legislation (International Bar Association)
|
| Last Updated: 16 April 2012 |