1. General framework
Financial Action Task Force (FATF) announced that Mongolia included in the FATF grey list considering as a favorable country for supporting money laundering and terrorism financing on 18 October, 2019.
Recommendations 24 and 25 of the FATF are focused on the legal entity’s transparency and measures related to the ultimate beneficial owner and FATF assessed under their report on Mutual Evaluation of Mongolia with regard to the ultimate beneficial owner as followings:
- Mongolia had not assessed the risks associated with the different types of legal entities incorporated in such country and any sanctions for non-compliance with obligations under Recommendation 24 were not dissuasive.
- Mongolia did not have a mechanism to monitor the quality of assistance it receives in response to requests for basic or ultimate beneficial owner information.
Within the obligation and task are given by FATF, the Parliament of Mongolia has adopted the Law of Mongolia on the Procedure for compliance with the General taxation law and amended the Law of Mongolia on State registration of the legal entity with regard to accurately register the ultimate beneficial owner information.
In accordance with Article 9 of the Law of Mongolia on the Procedure for compliance with the General taxation law, the legal entity incorporated in Mongolia prior to 01 January 2020 shall be obliged to register the ultimate beneficial owner information of legal entity to the State Registration Authority within 01 January 2021.
Moreover, under Article 9 and 10 of the Law of Mongolia on State registration of legal entity, the legal entity shall keep the basic record of a legal entity in paper and electronic form in the state registration database and basic record of the legal entity includes information on the ultimate beneficial owner and its shares amount, interest and voting right. In case that the information on the ultimate beneficial owner is changed, the legal entity shall be obliged to submit the basic record of the legal entity to the State Registration Authority.
This legal information was prepared by Umguulliin Absolute Advocates LLC, the Mongolian office of GRATA International, an international law firm that has its branches in 20 countries around the world. The material contained in this alert is provided for general information purposes only and does not contain a comprehensive analysis of each item described. Before taking (or not taking) any action, readers should seek professional advice specific to their situation. No liability is accepted for acts or omissions taken in reliance upon the contents of this alert.
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