Mongolia Country Summary

FATF Status

Mongolia is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 23 October 2020

The FATF welcomes Mongolia’s significant progress in improving its AML/CFT regime. Mongolia has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in October 2019. Mongolia is therefore no longer subject to the FATF’s increased monitoring process. Mongolia will continue to work with the APG to improve further its AML/CFT regime.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Mongolia was undertaken in 2023. According to that Evaluation, Mongolia was deemed Compliant for 9 and Largely Compliant for 31 of the FATF 40 Recommendations. It remains Highly effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings.

Corruption in Mongolia has significantly impacted foreign investment, with many investors withdrawing due to widespread government corruption, particularly in state-owned enterprises. Public protests in 2022 highlighted these issues, leading to parliamentary hearings that, despite exposing billions in alleged corruption, resulted in minimal legal consequences for the implicated officials. The U.S. State Department advises American businesses to be vigilant in compliance with anti-corruption laws, as the Mongolian government struggles to effectively enforce its own anti-corruption measures, leaving many officials to operate with impunity.

Mongolia's economy presents significant opportunities for investors due to its vast natural resource reserves, particularly in sectors like cashmere apparel and agriculture. However, the country faces challenges such as vulnerability to external economic shocks, regulatory unpredictability, and a lack of effective dispute resolution mechanisms, which can deter foreign investment. Despite recent legislative efforts to improve the investment climate, concerns about transparency and government favoritism towards state-owned enterprises remain prevalent.

Mongolia's investment climate presents both opportunities and challenges for foreign investors, characterized by a lack of market-access barriers and few investment restrictions. However, concerns about political sensitivity in sectors like mining and energy, along with unpredictable regulatory burdens and ineffective dispute resolution, create a perception of high risk. Recent government initiatives to streamline investment processes and support foreign investment signal potential improvements, but the lack of consistent implementation of laws remains a significant concern for investors.