Commission Action Plan for a new single EU Anti-Money Laundering System

"The European Union takes anti-money laundering and countering terrorism financing very seriously. Internally, we apply demanding expectations from our Member States. Beyond our borders, we need to align the EU list closer to the lists published by the FATF (Financial Action Task Force). Our list dates back to 2016. Consequently, it increasingly diverged from the FATF lists, which represent the international consensus on the matter. As Mongolia is still a country under Increased Monitoring by the FATF (confirmed in October 2019), the EU list needed to be updated. The EU listing does not entail any punitive effect. We are here to assist our partners that need technical assistance. We aim at supporting more our partners (not less) to address AML/CFT issues by better tailoring the existing technical assistance to address strategic deficiencies in the best interest of both parties", the EU Ambassador to Mongolia said.

The EU list up to now was largely outdated since it did not reflect latest lists adopted by the Financial Action Task Force (FATF). Therefore, it was necessary to adopt a new EU list and align the EU list closer to the lists published by the FATF in order to not expose the internal EU market to serious risks of money laundering and terrorist financing.

Mongolia will be listed when the proposed legislation will enter into force: only from 1 October this year, because of COVID-19.

Transactions made by EU financial institutions with persons established in Mongolia are not forbidden or blocked. It does not impede development policy which is implemented in Mongolia.

The listing process does not affect the legitimate trade flows, the EU humanitarian assistance, the development policy or the provision of grants, procurement and budget support in those third countries put on the EU list. Therefore there should be no adverse effect with regard to actions physically implemented in listed jurisdictions.

The only consequences are for the financial system: Banks and other entities are required to apply enhanced vigilance in transactions involving Mongolia (so called "enhanced customer due diligence requirements"). This is also in line with international obligations, where the FATF already calls on its Members to apply enhanced due diligence to high-risk countries. Those enhanced measures will lead to extra checks and monitoring of those transactions by banks and entities in order to prevent, detect and disrupt suspicious transactions.

Since October 2019, Mongolia continues to take significant steps towards improving its AML/CFT regime, including by demonstrating an increase in sanctions and remedial actions by financial supervisors for identified violations, and further seizing and confiscating falsely/non-declared currency.

Mongolia is actively working with the FATF to address strategic deficiencies in its regimes to counter money laundering, terrorist financing, and proliferation financing. Mongolia is committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.

The European Union will continue to help Mongolia in implementing its action plan to address its strategic deficiencies, including by: (1) improving sectoral money laundering / terrorism financing risk understanding by Designated Non-Financial Business and Professions supervisors, applying a risk-based approach to supervision, particularly in relation to dealers in precious metals and stones; (2) demonstrating increased investigations and prosecutions of different types of ML activity in line with identified risks; and (3) monitoring compliance by financial institutions and designated non-financial business and professions supervisors with their proliferation financing-related targeted financial sanctions obligations, including the application of proportionate and dissuasive sanctions.