FATF status

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

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 perceptions of high-level government corruption, particularly in state-owned enterprises. Despite parliamentary hearings and some legal actions against corrupt officials, the outcomes have been largely disappointing, leading to skepticism about the government's commitment to genuinely addressing corruption. The OECD has recommended comprehensive reforms to strengthen anti-corruption legislation and enforcement, while acknowledging some progress made by the Independent Authority Against Corruption.

Mongolia's economy presents significant opportunities for investors, particularly due to its vast natural resource reserves and minimal market-access barriers. However, challenges such as vulnerability to external shocks, unpredictable regulatory burdens, and a lack of effective dispute resolution mechanisms create a cautious investment climate. Despite these risks, sectors like cashmere apparel, agriculture, and franchises have shown strong potential, while the government is making efforts to improve the investment climate through legislative support.

Mongolia's investment climate presents both opportunities and challenges for investors, characterized by its vast natural resource reserves and minimal market-access barriers. However, concerns about political sensitivity in sectors like mining and energy, along with unpredictable regulatory burdens and ineffective dispute resolution, create a cautious atmosphere for potential investors. Recent government initiatives aim to improve the investment climate, but the lack of consistent implementation of laws and regulations continues to deter foreign investment.