Mongolia AML Obligations for Accountants: Law Guide

Mongolia's main anti-money laundering statute is the Law on Combating Money Laundering and Terrorism Financing. This guide is based on an unofficial English translation of the law that includes amendments adopted on 26 April 2018, published by Mongolia's Financial Regulatory Commission. It is written for accountants and finance students who want to see how a rule set outside Europe handles professional advisers. If you are new to the topic, our KYC and customer due diligence guide explains the shared building blocks.

Please read "What we could not confirm" at the end. The text is a translation with some garbled numbering, so the points below describe the structure of the law, not a current compliance checklist.

Are accountants covered?

According to Article 4.1.9 of the translation, notaries, lawyers, accountants and other financial management counsellors are reporting entities when acting for a client in specified activities. Those activities are buying or selling real estate, managing client assets, managing bank, savings or securities accounts, company formation, creating or managing legal persons or arrangements, and buying or selling business entities. In the text we read, accountants appear only in that provision, and auditors are not listed. Trust and company service providers are not named separately, though some of their functions are covered when performed by notaries, lawyers or accountants.

Who supervises

Article 19.1 gives the Bank of Mongolia responsibility for banks and the Financial Regulatory Commission responsibility for most financial institutions and real estate agents. For the professions in Article 4.1.9 it refers to "competent licensing or supervisory authorities" working on a risk-based approach. The text does not name the authority for accountants, so we cannot say which body inspects an accounting firm. The financial intelligence unit also monitors compliance.

When customer due diligence applies

Article 5.1 sets the triggers: before establishing a financial relationship, for occasional transactions of 20 million MNT or more (or the foreign equivalent) by customers without an ongoing relationship, for linked transactions within 24 hours totalling 20 million MNT or more, where there are doubts about earlier information, and where money laundering or terrorism financing is suspected.

For individuals, the entity collects full name, date of birth, registration number and a copy of the ID or passport. For legal entities it collects the name, address, registration and tax numbers, contact details, the registration certificate and details of management. If a customer will not provide the required information, the entity must refuse service. Shell banks are prohibited, and anonymous, numbered and fictitious-name accounts are banned.

Higher-risk and lower-risk customers

Enhanced due diligence applies to high-risk customers, including politically exposed persons, persons from countries with inadequate AML systems, and persons in sectors the national risk assessment identifies as high risk. Simplified due diligence is allowed for public bodies and listed public companies, and between reporting entities. For more on the PEP concept, see our guide to politically exposed persons.

Beneficial owners

The law sets a three-step test. First, identify the natural persons with a controlling ownership interest, alone or jointly. If none can be identified, identify the natural persons who exercise control by other means. If that also fails, treat the senior managing official as the beneficial owner. Entities must record the beneficial owner's full name and take reasonable steps to verify it.

Reporting to the financial intelligence unit

Article 7 sets the reporting deadlines for reporting entities. Cash and foreign settlement transactions above 20 million MNT must be reported within 5 working days, and suspicious transactions within 24 hours. Reports can be submitted by fax, electronic form or in writing, in the approved formats. Our guide to suspicious activity reports and tipping off compares this approach with UK practice.

Confidentiality and protection for reporters

The text does not use the phrase "tipping off", but Article 13.1 bars entities, their management and staff from disclosing information about reported transactions to anyone other than the persons named in Article 7.4. Article 12 says a report is not a breach of secrecy and protects good-faith reports that are not later proven to relate to money laundering or terrorism financing.

Record keeping

Article 8.1 requires records to be kept for at least five years after the transaction date or account closure, in a form that lets authorities obtain them promptly.

Internal programme and enforcement

The text does not use the term "compliance officer". Instead, Article 14 requires the board or equivalent body to adopt an Internal Monitoring and Risk Management Program. It must include procedures for appointing and dismissing the staff responsible for implementing the rules, and training, and it must be filed with the supervisor and reviewed periodically. Article 23 refers to liability under other laws and lists supervisory measures such as warnings, deadline orders, recommendations to limit or cancel licences, and orders to remove or suspend senior officials. It sets no fine amounts.

Our suggestions for an accounting practice

These are our own suggestions, not requirements of the law. Map your services against the activities in Article 4.1.9, since the obligations attach to those activities rather than to every engagement. Keep a one-page log of cash and linked transactions against the 20 million MNT figure. For structured study on these topics, see our CPD courses.

Frequently asked questions

Are auditors reporting entities under this law?

Not in the translation we read. Article 4.1.9 lists accountants but not auditors.

How fast must a suspicious transaction be reported?

According to Article 7.2, within 24 hours.

How long must records be kept?

At least five years under Article 8.1.

What we could not confirm

We read an unofficial English translation that includes amendments up to 26 April 2018. We did not check later amendments or the Mongolian original. The translation has garbled article numbers and a commencement date in Article 24 that conflicts with the 2018 amendments, so check the official text. We did not confirm which authority supervises accountants, and the law sets no fine amounts in the text we read. This post is general information, not legal advice.