Rio's Oyu Tolgoi financing task in Mongolia toughens

The task of convincing lenders to stump up money for projects in Mongolia, such as Rio Tinto's Oyu Tolgoi copper project, just got harder after the nation's financial system was ruled to have deficient safeguards against money-laundering and terrorism financing.

The Financial Action Task Force (FATF), an intergovernmental agency that counts Australia as one of its 39 members, placed Mongolia on its "grey list" along with Zimbabwe and Iceland.

The ''grey list'' contains nations whose financial systems are considered by FATF to be lacking in safeguards against money laundering and the financing of terrorism.

Addition to the ''grey list'' typically prompts financial institutions in nations with strong anti-money-laundering rules to sever ties with banks in the ''grey listed'' nation, and may therefore raise the cost of capital and the cost of doing business in Mongolia.

Nations already on the grey list include Syria, Pakistan, Botswana, Panama, Yemen, the Bahamas, Trinidad and Tobago, Ghana and Cambodia.

''FATF has identified Iceland, Mongolia and Zimbabwe as jurisdictions with strategic (anti-money laundering and combating the financing of terrorism) deficiencies,'' said the task force on Saturday Australian time.

Source:www.afr.com