PARLIAMENT APPROVES AMENDMENTS TO THE LAW ON CONFLICTS OF INTEREST
On April 13, Parliament approved a final draft of amendments to the Law on Regulating and Avoiding Conflicts of Interest Among Public Officials, which was put forward by Cabinet in October 2016.
A number of MPs and members of the public have spoken out in support of banning public officials from being invested in the creation of offshore companies, and from opening and accessing offshore bank accounts.
There are 37,942 public officials who are required to declare all of their assets to the Independent Authority Against Corruption (IAAC), and these officials and their family members will be affected by the newly amended version of the law.
The MPs reviewing the amendments supported fighting money laundering, financial crimes, and offshore accounts, but a number of MPs said that the new legislation could overwhelm the IAAC, as it calls for the IAAC to dismantle tax evasion and money laundering schemes.
Some MPs asked the authors of the amendments if the IAAC has the officials, equipment, and computer software required to monitor the implementation of the law.
Vice Chairman of the IAAC Ts.Nyamdorj emphasized that the IAAC has started using an online system that receives asset declarations from public officials to carry out fast service. The IAAC says it can expand its capacity to implement the newly amended law.
Member of Parliament Kh.Nyambaatar, one of the legislators in charge of drafting the amendments, pointed out that by using lists of offshore financial centers, the Government of Mongolia will draft a list of countries and territories in which public officials and their family members will be unable to have a bank account or hold real estate.
He added that the International Monetary Fund, Tax Justice Network, and Organization for Economic Co-operation and Development conduct independent studies of offshore accounts, and the government will add countries and territories that have been identified by these three organizations to offer illegal tax shelters to the government's list of banned countries.
MP Kh.Nyambaatar noted that these three organizations have named 42 countries and territories as offshore financial centers so far, and these 42 countries and areas will be automatically designated by the Government of Mongolia as banned offshore zones.
Minister of Justice and Internal Affairs S.Byambatsogt stated that when Parliament received the first draft of the amendments, MPs wanted to revisit sections involving public officials and their relatives. He noted that there was a lot of opposition to members of Parliament and Cabinet protecting offshore account holders, and that the public response and protests appear to have had an impact on Parliament's appraisal of the amendments.
He said that the first draft banned public officials and their business partners from opening and accessing offshore bank accounts, but during a standing committee review, MPs put forward proposals to ban ownership of property and real estate in banned countries as well.
He added that the IAAC will implement the new law with assistance from the government, but implementing the newly amended law will be very challenging. The number of people connected to public officials, including their family members and business partners, could be as many as 700,000 to 800,000 individuals.