The 2018 G20 Summit will be held from November 30 to December 1 in Buenos Aires, Argentina and it will convene Finance Ministers and leaders of central banks of the G20 major economies. Japan intends to urge its G20 counterparts to beef up efforts to prevent cryptocurrencies from being used for money laundering and to hold a discussion on safeguarding consumers’ interests.
Although methods are becoming more advanced to detect financial crimes today, the technological achievements also have been utilized to hide money earned from illegal business, particularly for money laundering. Financial technological advances especially cryptocurrency is at risk of becoming a major tool for carrying out money laundering crimes. A new financial technology namely cryptocurrency is a vivid example of it. A proper regulation has not been designed yet for the blockchain-based cryptocurrency which attracts attention of those who hide their illegally earned money. Thus, serious steps should be made to prevent such illicit actions due to a fear that it would go out of control. Japan, the first nation that generated a market for cryptocurrency, warned that there is still potential for other nations to make money laundering due to lack of a general regulation.
The Financial Action Task Force (FATF) was established 1989 in Paris, France on the initiative of the G7 to develop policies to combat money laundering. In 2001 its mandate expanded to include terrorism financing. Now joining 35 member jurisdictions and two regional organizations, the FATF regularly conducts joint evaluations with its members on combating against money laundering and terrorism.
In case that the forthcoming G20 Summit decides to prevent the cryptocurrency from money laundering crime and to impose punishment on cryptocurrency usage, Mongolia will be adhering to this act because the country is a member of the Pacific Group On Money Laundering, a FATF-style regional body.
Mongolia made a first step of creating a legal landscape to fight money laundering and financing of terrorism. However, the country has not seen a tangible outcome yet. According to a report on Mongolia’s financial crimes, only 49 cases have been transmitted for investigation, but the law enforcing body takes actions against the money laundering. Punishment was imposed in only two cases, and other cases were rejected at the trial stage. The money laundering is a very serious crime, but the rate of detection and punishment are not yet at satisfactory level.
Furthermore, Mongolia satisfied only five principles out of 40 internationally-recognized ones according to a report on the evaluation by the APG and FATF over Mongolia. The report also identifies that 10 principles were partly realized, and other 15 principles were not satisfied. It means that Mongolia needs to improve the legal environment and more importantly Mongolia was demanded to ensure the implementation.
Since Mongolia is under an intensive supervision, the country’s commercial banks have been categorized as ‘high risk’ and they face the risk of reduced external collaboration and to need to identify clients with high amount of accounts.
Source: Invest Pro Mongolia #1 (2018)