Interview: EU Ambassador to Mongolia explains its Black Listing www.news.mn

A few days ago, The European Commission decided to add Mongolia and eleven other countries to its list of states that pose financial risks to the bloc because of anti-money laundering and terrorism financing. So, to find out why, News.mn interviewed Mr. Traian Laurentiu Hristea, Ambassador of Head of the European Union Delegation to Mongolia about its black listing decision.

The European Union added Mongolia to its money-laundering blacklist. What was the reason? Was it affected by the decisions in regard to judiciary and legal environment besides of economic policies taken by the Mongolian authorities?

The European Union takes anti-money laundering and countering terrorism financing very seriously and it is one of our major priorities.

Internally, we apply demanding expectations from our Member States: As of January 2020, there are still 16 open cases for the infringement of not completely transposing the relevant legislation (the 4th Anti-Money Laundering Directive) and two open cases before the Court of Justice for non-communication.

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 diverges 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The EU list up to now was largely outdated since it did not reflect latest lists adopted by the Financial Action Task Force (FATF) since October 2018. 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 market to serious risks of money laundering and terrorist financing.

The proposed legislation will enter into force only from 1 October this year, because of COVID-19.

What are the consequences of being blacklisted for Mongolia?
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. These measures do not entail any type of sanctions, restrictions to the legitimate trade relations or impediment to development aid; but it aims to apply enhanced vigilance measures in those cases. In such cases, entities need to apply extra checks (e.g. requesting additional information, additional checks, request approval of senior management or increased audits).

What is the situation with money laundering and terrorist financing in Mongolia?
As you will recall, 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.

What do we need to do to get off the blacklist?
Mongolia should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) improving sectorial 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.

What loans and projects has the European Union provided to Mongolia so far? Does this mean that the funding will stop in the future?
The EU listing does not entail any punitive effect; transactions made by EU financial institutions with persons established in Mongolia are not forbidden nor blocked. It does not impede development policy which is implemented in Mongolia. 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 listing process does not affect 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 trial of former Prime Minister of Mongolia M.Enkhsaikhan has finished yesterday, sentencing him for 4.6 year. The European Union’s Delegation said it was watching the trial closely and handed over a bear. Why did you pay close attention to this trial?
Many people oppose the court’s decision. According to the EU Delegation, how do you see the court’s decision?
Mongolia has ratified a number of human rights treaties. These treaties include the International Covenant on Civil and Political rights, which includes the right to free trial, rules on pretrial detention, and other rights.

Mongolia is a beneficiary of the EU Generalized System of Preferences plus (GSP+). This means that around 6500 Mongolian goods can enter the EU markets without duties. In exchange of this preference, Mongolia has to implement and respect 27 international treaties. These treaties include the International Covenant on Civil and Political Rights I mentioned earlier.

It is our duty to gather information on how Mongolia is implementing all these treaties to be able to continue giving Mongolia these trade preferences.

No new Covid-19 case in Mongolia, total remains at 42, with 15 recoveries www.montsame.mn

Ulaanbaatar /MONTSAME/. At today’s daily briefing on the situation around COVID-19 infections in the country, D.Nyamkhuu, Director of the Center for Communicable Diseases (NCCD) informed that another patient has been recovered from the coronavirus, making the total number of recoveries in Mongolia 15.

Mongolia now able to transfer sentenced persons with 21 countries www.montsame.mn

Ulaanbaatar /MONTSAME/. At its session on May 8, the Parliament approved the ratification of the Inter-American Convention on Serving Criminal Sentences Abroad.

Nearly 800 Mongolians abroad to arrive home in near future www.montsame.mn

Ulaanbaatar /MONTSAME/. According to the operative team of State Emergency Commission (SEC), Mongolia will evacuate its citizens from India, Turkey and Russia on May 13-19.

Steppe starts gold and silver sales in Mongolia www.mining-journal.com

"In a very difficult business environment we have been able to reach this key milestone," executive chairman Matthew Wood said yesterday.

Moody’s changes Mongolia’s outlook from stable to negative www.zgm.mn

Moody’s Investors Service revised the issuer ratings of Mongolia from stable to negative but the previous status of the long-term B3 rating was unchanged. The decision to change the rating outlook to negative reflects rising external vulnerability risks related to a sharp fall in export revenue, widening the current account deficit to about 15 percent to 20 percent of GDP in 2020 amid declined demand for commodities, said the rating agency. This is mainly influenced by rating drops. Moreover, the government’s borrowing requirements are expected to increase markedly, in part to fund a large stimulus package, which raises liquidity risks. As of the first three months, deficits in the current account increased by two times to USD 767 million from a year ago. Government spending during the coronavirus outbreak is estimated to widen the fiscal deficit to 8.5 percent of GDP in 2020. Moody’s projects the economy’s reserves to fall to USD three billion by the end of the year from USD 4.4 billion as of February. This comes at a time when access to external financing is highly uncertain. In the current environment of heightened uncertainty about Mongolia’s capacity to generate export revenue and obtain external financing at moderate costs and in a timely fashion, there is a risk that funding pressures will increase (not yet acute), Moody’s said. Previously, the Bank of Mongolia (BoM) highlighted the importance of not downgrading the credit rating due to the expected external debt.

Bayan Khundii gold project value to double as gold price rises www.zgm.mn

The value of the gold projects has been increased during the time when the gold price climbs. According to Erdene Resource Development Corp. (ERD)’s preliminary feasibility study, the price of gold reflected to stand at USD 1,300 per ounce, but it has risen to USD 1,700 currently, the project’s value has almost doubled to USD 188 million. Additionally, ERD’s stock traded at CAD 0.23 on the Toronto Stock Exchange (TSX) on Friday. The company, which has received mining licenses for the Khundii gold project, is working to complete a detailed feasibility study by mid-2020. At the same time, some discussions related to financing gold companies have been revealed. Moreover, the Speaker of Parliament, Zandanshatar Gombojav highlighted that implementing the Gold 2 program and providing funding to gold companies will help increase foreign exchange reserves and ensure the stability of the tugrik.

CGA: Coal export declined by nearly three times yoy www.zgm.mn

Since the beginning of the year to May 10, a total of 4.6 million tons of coal was exported at USD 374.5 million, according to the preliminary data of the General Customs Administration (CGA). Compared to the same period last year, it is 2.7 times less and 2.8 times less in price. A total of 482,000 tons of coal have been exported in May alone. According to the Minister of Finance, 470 trucks exported coal at Gashuunsukhait port and 233 trucks at Shiveekhuren port last Friday. Despite the increase in coal exports, the CEO of Tavan Tolgoi JSC said that it would return to normal only if more than 500 trucks produce coal at the Gashuunsukhait port daily. Erdenes Tavan Tolgoi, which plans to sell 9.2 million tons of coal this year, said it is expecting a 30 percent drop in coal exports. Mongolyn Alt (MAK) LLC exported more than 300,000 tons of coal in the first four months. The Vice President of the company highlighted that it is several times less than the same period of previous years. SouthGobi Resources Ltd., one of the companies that mine coal at Nariinsukhait deposit, said in May that it would sell coal from the warehouse.

Anti-corruption authority: Mongolian government official misuses budget money www.news.mn

Earlier yesterday (12 May), the Mongolian Independent Authority against Corruption reported that an unnamed government official is under investigation for the misuse of MNT 1.3 billion (USD 465,896) from the state budget. According to one source, the official paid the money as compensation to employees who were illegally fired from their jobs. This corrupt altruism needs to be verified.

China lifts tariffs on US goods despite Trump’s threat to rip up trade deal www.rt.com

A new list of US products to be exempt from trade tariffs has been announced by China’s finance ministry on Tuesday. It said the new waivers will take effect on May 19 and expire on May 18, 2021.
The exemptions cover 79 products in total, including rare earth mineral ores, aircraft radar equipment, semiconductor parts, medical disinfectants, and a range of precious metals, chemical and petrochemical products.