IIB to advise Mongolia on how to tackle money laundering

IIB to advise Mongolia on how to tackle money laundering
IIB council meeting in Bratislava on December 6.
By Robert Anderson in Bratislava December 7, 2017

The International Investment Bank (IIB), the Moscow-based multilateral development bank, together with Slovakia will advise Mongolia on how to fight money laundering and the financing of terrorism, it was announced at an IIB council meeting in Bratislava on December 6.

Mongolia, a shareholder of the IIB, needs to improve regulation of its financial system as part of the requirements of its ongoing $5.5bn assistance programme led by the International Monetary Fund (IMF).

European Union finance ministers also put Mongolia on a blacklist earlier this week as a “non-co-operative tax jurisdiction” for failing to help fight international tax evasion. The EU said the countries including Mongolia failed to meet international standards and had not given sufficient commitments that they would change their ways.

Under the memorandum of understanding for the project – which was signed by the IIB and the Mongolian Financial Regulatory Commission (FRC) on December 6 – the existing Mongolian legal and regulatory framework will be reviewed in respect of the recommendations the country has received for combatting money laundering and the financing of terrorism, and then suggestions for improvements will be made to the Mongolian government for implementation. The project also aims to help raise awareness of the anti-money laundering and counter-terrorism financing issues among the general public and financial sector in Mongolia.

“This will raise the investment outlook on the Mongolian economy, securing stability and safety in the national economy, as well as strengthening its integration into the global financial infrastructure,” the IIB said in a press release.

Davaasuren Sodnomdarjaa, FRC chairman, told bne IntelliNews in an interview that around 60% of the international Financial Action Task Force’s guidelines for combatting money laundering and financing of terrorism fell under her regulator’s remit. The FRC regulates Mongolian financial markets apart from the commercial banking sector.

“Existing legislation on anti-money laundering and combatting the financing of terrorism is not that sophisticated,” she admitted. “We need to improve it.”

She said Mongolia “wanted to be more open and co-operative with the EU”. Mongolia’s inclusion on the EU blacklist “was not pleasant news for us”, she said. “We are ready to find out why we are on this list”.

A technical assistance fund established by the IIB and Slovakia, an IIB member, will finance the anti-money laundering consultancy work, which will be carried out by E&Y Slovakia.

This is a pilot project for the IIB’s technical assistance fund, which is designed to provide advisory and technical assistance to the developing countries that are members of the bank, namely Mongolia, Cuba and Vietnam. Slovakia has provided $1mn for the fund, the IIB $250,000. Jozef Kollar, IIB deputy chairman, says it is already preparing similar projects in the other two countries.

The consultancy work is part of a drive by the IIB to spread its wings as a multinational development bank, set out in its Bucharest Strategy this June.

In an interview with bne IntelliNews, Kollar said the IIB, which has restructured itself to become a standard multinational development bank over the past five years, was now in a position to move from being a receiver to a provider of advice.

“We are ready to provide advice and consultancy services in good bankable projects,” he said. “We have accumulated enough knowledge and best practice to give added value.”

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