LAW OF MONGOLIA ON COMBATING MONEY LAUNDERING AND TERRORISM FINANCING. Chapter one General provisions

Transcription

1 LAW OF MONGOLIA ON COMBATING MONEY LAUNDERING AND TERRORISM FINANCING Chapter one General provisions Article 1. The purpose of the law 1. The purpose of this law is to regulate relations, concerned with combating money laundering and terrorism financing, and their prevention. Article 2. Legislation 2.1. Legislation on combating money laundering and terrorism financing shall consist of the Constitution of Mongolia 1, the Criminal Law, present Law and other legal acts, adopted in conformity with them If an international treaty, to which Mongolia is a party, provides otherwise than in this Law, the provisions of the international treaty shall prevail. Article 3. Law definitions 3.1. The terms used in this law shall be understood as follows: money laundering means conversion of assets, though known as illicitly gained, for the purpose of concealing their origin and legalizing the right to possess, use and administer them; terrorism financing means accumulating, transferring and spending in any form assets, being aware that they will be used for financing terrorist organizations and terrorist acts; person due to inform means persons, stipulated in Article 4 of this Law; illegally gained assets means assets, gained otherwise than provided in Article 166 of the Criminal Law, i.e. through commitment of a rather severe, severe or extremely severe crime; suspicious transaction means a transaction that is suspected to be relating to the money, the origin and beneficiary of which are unknown, or which was executed via a country without financial control mechanism, as well as related to money laundering and terrorism financing; cash transaction means a transaction using Mongolian or foreign currency in cash, as well as cheques, promissory notes and securities commonly used for international payments and settlements; 1 Constitution of Mongolia - published in the State News Bulletin, issue #1, Criminal Law State News Bulletin, issue #5, 2002

2 suspension of transaction means halting a transaction temporarily in order to investigate the information about a suspicious transaction, in accordance with the Financial Intelligence Unit decision The List of countries without financial control mechanism to combat money laundering and terrorism financing, provided in Item of this Law, shall be approved by the Governor of Mongolbank. Article 4. Persons due to provide information CHAPTER TWO Preventive Actions 4.1. Following persons are obligated to provide with information the Financial Intelligence Unit on the transactions, stipulated in Article 7 of this Law: banks; non bank financial institutions; insurance companies; professional participants in securities market; pawn shops; savings and credit cooperatives; persons engaged in currency exchange operations; organizers of lotteries, gambling and betting for money; Legal persons or individuals, not provided in Item 4.1. of this Law, may report to the Financial Intelligence Unit on particular transactions, that are deemed to relate to money laundering or terrorism financing, or on cash transactions equal to or above MNT 20 million (or equal amount in foreign currency) Persons stipulated in Item 4.1. of this Law are prohibited to open nameless, or numerated or false named accounts, to execute transactions?, or use closed accounts. Article 5. Verification of information on customers 5.1. Persons, stipulated in Item 4.1 of this Law, shall verify the information on customers in the following cases: prior to delivering financial services; prior to making transactions equal to or above MNT 20 million (or in foreign currency equal to the amount); in case there are grounds to consider that several transactions related to each other, though each for amount less than stipulated in Item , but all together totaling to MNT 20 million

3 /or equal amount in foreign currency/ or above, were executed in order to avoid the submission of information, stipulated in Item 5.2 of this Law; in case there is a need to verify previously received information about a customer; prior to transactions, related to foreign payments; in case there are other grounds to view that a particular customer or a particular transaction is linked to money laundering and terrorism financing Person, stipulated in Item 4.1. of this Law, should collect the following information from customers: if a customer is an individual - his/her name, surname, identification card number, residence address, contact telephone numbers and a notarized copy of ID card; if a customer is a legal person - its name, address, state registration and tax payer s number, contact telephone numbers, and a notarized copy of the state registration certificate, and detailed background information on the management; the purpose of transaction, information on beneficiary; information on the person, who executed the non-cash transfer If customer refuses to provide the information, specified in Article 5.2 of this Law, the person, stipulated in Item 4.1. of this Law, is obligated to refuse to open an account, conduct transaction or deliver other financial services Person, stipulated in Item 4.1. of this Law, should within a year period update the information on all customers, with whom it has established business relationships before the enactment of this Law, in compliance with the requirements of Item 5.2 of this Law. Article 6. Transactions subject to special monitoring 6.1. Person, stipulated in Item 4.1. of this Law, shall be liable to examine with particular care the following transactions: a transaction for an amount equal to or above MNT 20 million (or of equal amount in foreign currency); a transaction with unclear purpose; a transaction, executed via countries that are listed in Item 3.1. of this Law; a non-cash transaction or the one without complete information on remitter; a transaction, executed in the name of government officers or political party leaders, listed in Item 3.2. of this Law;

4 transactions of a customer of other nature compared to his/her earlier transactions 6.2. Person, stipulated in Item 4.1. of this Law, shall take due actions to obtain additional information and clarifications on transactions, stipulated in Item 6.1 of this Law. Article 7. Reporting on suspicious transactions 7.1. Person, stipulated in Item 4.1. of this Law, is obligated to report to the Financial Intelligence Unit on the cash transactions, provided in Items 5.1.2, and of this Law If there are grounds to suspect that the transaction, stipulated in Item 7.1. of this Law, within 7 days after its execution, is linked to money laundering or terrorism financing, the respective information together with documents shall be submitted to the Financial Intelligence Unit within 24 hours, by filling out the approved format Person, stipulated in Item 4.1. of this Law, should report to the Financial Intelligence Unit on the transaction related information by facsimile, or letter. If the information was delivered by phone, it shall be immediately documented/ or confirmed by fax or letter Person, stipulated in Item 4.1. of this Law, shall provide with required information, related to the transaction and parties, involved in the transaction, at the written request of the competent body, in conformity with the Information Delivery Procedure, approved jointly by the Governor of Mongolbank and the State Prosecutor General. Article 8. Record-keeping 8.1. Person, stipulated in Item 4.2. of this Law, shall keep at least for 5 years the file of materials and documents, related to the transactions and closed accounts of the customer. Article 9. Reporting on suspicious transactions 9.1. A report on a suspicious transaction to the Financial Intelligence Unit shall contain the following information: full name and address of the person, stipulated in Item 4.1. of this Law, and the full name of the information delivering official; information on a customer and beneficiary; transaction related information including amount, form of transfer, date, bank account number, information on involved parties and bank account holder; brief explanation of grounds and circumstances to suspect a particular transaction; and other related supporting documents and materials. Article 10. Account monitoring

5 12.1. If there are grounds to suspect that the account, mentioned in the information obtained from the person, stipulated in Item 4.1. of this Law, is related to money laundering or terrorism financing, the Information Intelligence Unit may monitor that particular account. Article 11. Suspension of transactions If there are grounds to suspect, that the transaction executed or intended is linked to money laundering and terrorism financing, the Information Intelligence Unit may decide to suspend the transaction The decision provided in Item of this Law shall be forwarded to the person, stipulated in Item 4.2 of this Law, in writing, but if this is impossible, the latter shall be notified by telephone, to be followed by a written notice within 24 hours after such a verbal notice The suspension period shall not exceed three working days, and during this period the Information Intelligence Unit shall undertake the following actions: to collect necessary information on the particular transaction from relevant domestic and foreign organizations; if the particular transaction has been proven and documented to be designated for money laundering and terrorism financing, the competent body should be respectively informed and related documents shall be transferred to it for investigation; to annul immediately the decision to suspend the transaction, if the transaction has not been proven to be related to money laundering and terrorism financing, and the person, stipulated in Item 4.1.of this Law, shall be immediately notified respectively. Article 12. Exemption from liability Informing the Financial Intelligence Unit or the competent body as provided by this Law by a person, stipulated in Item 4.1. of this Law, shall not be deemed as a breach of banking or professional secrecy If a report delivered by a person, stipulated in Item 4.1. of this Law, has not been proven to be relating to money laundering and terrorism financing, it is prohibited to impose administrative sanctions or criminal charge on the person delivered such an information Any harm, caused to a citizen or a legal person, whose transactions were suspended according to Article 11 of this Law, shall not serve as grounds for holding criminally liable the person, stipulated in Item 4.1. of this Law, and the Financial Intelligence Unit A matter of eliminating any harm caused to a citizen or a legal person by actions of the person, stipulated in Item 4.1 of this Law, and the Financial Intelligence Unit, in violation of the law, shall be settled in compliance with the procedures, provided in the Civil Code. 3 Article 13. Information confidentiality

6 3 Civil Code State News bulletin issue #7, Person, stipulated in Item 4.1. of this Law, and the Financial Intelligence Unit. shall be prohibited to provide or transmit to persons, other than the ones stipulated in Item 7.4 this Law, any information on customer s transactions The Head of the Financial Intelligence Unit and inspectors shall not disclose the information and documents obtained in the course of assuming their official duties and even after the release from their office. Article 14. Internal audit of the person due to inform Person, stipulated in Item 4.1. of this Law, shall develop and implement an internal audit program on combating money laundering and terrorism financing. The program shall include the following: procedure on disclosing suspicious transactions, securing information confidentiality, reporting to Financial Intelligence Unit and other competent bodies, and transferring documents to them; procedure for designation and release of officers, responsible for monitoring the implementation of laws and regulations on combating money laundering and terrorism financing, and the procedure provided in Item of this Law, as well as their rights and obligations; enrolling the officers, stipulated in Item of this Law, in qualification up-grading training; The program, specified in Item of this Law, should be submitted to the Financial Intelligence Unit for registration The model of the procedure, specified in the Article of this Law, shall be approved by the Governor of Mongolbank. Article 15. Cross-border transportation of cash Any passenger, crossing Mongolian border, carrying from MNT 5 20 million or its equivalent in foreign currency, shall declare truly about it in the Customs Declaration If cash exceeding the amount stipulated in Item of this Law /over MNT 20 million/ is carried to cross the Mongolian state borders, the authorized representative of the Financial Intelligence Unit shall be informed respectively, in compliance with the approved Declaration A person escaped, or refused to declare, or delivered false declaration, shall be imposed a sanction provided by the law The declaration format, provided in Item of this Law, shall be approved by the Governor of Mongolbank.

7 Article 16. Financial Intelligence Unit CHAPTER THREE Financial Intelligence Unit Mongolbank shall have a Financial Intelligence Unit (FIU), as a unit with a function to implement the legislation on combating money laundering and terrorism financing The Governor of Mongolbank shall approve the operation strategy and organizational structure of the FIU The head of the FIU shall be appointed by the Governor of Mongolbank with the consent of the Finance Minister The head of the FIU and inspectors should meet the following requirements: have an experience of working in banking, finance and legal area at least for 3 years; have no outstanding liabilities according to loan, guarantee collateral agreements; have no criminal past. Article 17. Functions of Financial Intelligence Unit The FIU shall assume the following functions besides the ones, stipulated in Articles 10 and 11 of this Law: to receive, collect and analyze the information from persons, stipulated in Items 4.1. and 4.2 of this Law, as well as from the database of competent government and similar foreign organizations; to maintain a database on suspicious and cash transactions, transferred to the competent body; to report regularly to the person, stipulated in Item 4.1.of this Law, and the competent body, on the actions taken according to received information about suspicious and cash transactions; to develop a methodology of investigating information related to money laundering and terrorism financing, of monitoring and disclosure of suspicious transactions, respectively inform the person, stipulated in Item 4.2. of this Law, and organize the implementation /of what?/; to inform the public at large and propagate on combating and preventing money laundering and terrorism financing FIU inspector shall monitor the enforcement of legislation on combating money laundering and terrorism financing, and be entitled to demand from the person, stipulated in Item 4.1. of this

8 Law, to eliminate any law violation, or have the case to be transferred to and investigated by the competent body, or prepare a proposal to annul its license/ special permit? FIU shall regularly monitor how the person, stipulated in Item 4.1. of this Law, and its officers fulfill their obligations taken by this Law. Article 18. Database The FIU shall maintain a central database that consolidates the information collected as provided by this Law The Governor of Mongolbank shall approve the procedure on maintaining the information in the database and its usage. Article 19. Relationship with similar international organizations The FIU shall cooperate with foreign and international organizations with similar functions and of the same level of confidentiality, in accordance with respective legislation The FIU may, in conformity with respective legislation, transfer the necessary information based on the request of organizations stipulated in Item 19.1 of this Law. Article 20. Collaboration Council CHAPTER FOUR Other provisions An ad hoc Council with functions to ensure the enforcement of the legislation on combating money laundering and terrorism financing, the exchange of information and provision of recommendations on their prevention, shall operate under the supervision of the FIU. Its composition and operation procedure shall be approved by the Governor of Mongolbank. Article 21. Penalties to be imposed on persons breaching the legislation If the violation of the legislation on combating money laundering and terrorism financing is not a criminal offense, the Financial Intelligence Unit inspectors shall impose on the guilty person the following administrative penalties: a fine of up to MNT 250,000 and up to MNT 1,000,000 shall be imposed respectively on an official and a legal person, who violated Items 4.3. and 5.3. of this Law; a fine of up to MNT 500,000 and up to MNT 1,000,000 shall be imposed respectively on an official and a legal person, who violated Article 13 this Law. CHAIRMAN, MONGOLIAN STATE GREAT KHURAL Ts. NYAMDORJ