Maldives fails global anti-money laundering review: what you need to know

Global watchdog warns of political interference, zero convictions.

Artwork: Dosain

22 Dec, 4:45 PM

What is this report?

The Asia/Pacific Group on Money Laundering (APG), an inter-governmental body of 41 countries, published its assessment of the Maldives' efforts to combat money laundering and terrorism financing. Known as a mutual evaluation, the review examined laws, regulations and their implementation against international standards set by the Financial Action Task Force (FATF). Assessors visited the Maldives in January 2025 and the report was adopted in August.

How did the Maldives perform?

Poorly. Six of eleven effectiveness areas were rated "low" – the worst possible score – including money laundering investigations, asset confiscation, and terrorism financing prosecution. The remaining five areas were rated "moderate." None achieved "substantial" or "high" effectiveness.

What are the main findings?

"The strategic geographic location of the Maldives positions it at a heightened risk for transnational crimes, and as a transit point for money laundering, drug trafficking, and human trafficking," the report stated. There was no national strategy to address these risks. A risk assessment completed in 2022 has never been made public. Only one asset confiscation order related to money laundering was ever granted. It was later overturned. Political interference was flagged as a "key vulnerability" undermining prosecutions.

Other key takeaways:

Since 2023, the Maldives has been "recognised as a strategic hub for heroin, cocaine, and cannabis trafficking, with established connections to organised crime networks in South and Southeast Asia."

The central bank's Financial Intelligence Unit indicated an increase in suspicious transactions flagged in 2023, "revealing the involvement of politically exposed persons (PEPs) in corruption, embezzlement, and misuse of authority through intermediaries such as family members and third parties."

State-owned enterprises were implicated in corrupt dealings in public procurement projects.

Scams became more sophisticated with "seemingly legitimate phishing emails and investment schemes that promise high returns for minimal fees." Other scams included fraudulent apartment sales, cryptocurrency transactions, recruitment fraud targeting migrant workers, internet banking fraud, and impersonation of financial institutions and government entities.

What about terrorism financing?

Despite a "high" risk rating, there have not been a single terrorism financing conviction. Aside from risks associated with money laundering, other vulnerabilities included "the cash economy, porous borders, weakness in STR [suspicious transaction reports] reporting, limited capacity of LEAs [law enforcement authorities] and challenges with regulation of NPOs [non-profit organisations]."

The report suggested that authorities have a "limited and fragmented" understanding of terrorism financing, often conflating it with terrorism itself. In 2023, the US Treasury designated 20 ISIS and al-Qaeda operatives in the Maldives along with 29 associated companies. None have been domestically designated under UN sanctions frameworks.

Why does terrorism financing matter in the Maldives?

The Maldives was once reported as having the highest per-capita rate of foreign terrorist fighters travelling to Syria and Iraq. US authorities previously Maldivian individuals and companies involved in recruiting fighters, funding their travel, and providing financial support to terrorist networks. The abduction of Maldives Independent (formerly Minivan News) journalist Ahmed Rilwan in August 2014 was by an al-Qaeda affiliate, a presidential commission concluded.

What about the MMPRC scandal?

The report did not specifically refer to the of US$ 90 million from the Maldives Marketing and Public Relations Corporation, a corruption scandal of historic proportions. Of 281 individuals implicated as beneficiaries of the stolen money, the vast majority have faced no consequences.

What other problems were identified?

The report criticised the prevalence of illegal money changers and hawala (informal money transfer) operations. These were poorly understood and inadequately policed. It found "no systematic monitoring" of non-profit organisations, despite their vulnerability to terrorism financing. The real estate sector, which was increasingly important with the leasing of islands and lagoons for resort development, did not have any regulatory framework.

What does this mean for the Maldives?

Countries that perform poorly in mutual evaluations can face increased scrutiny from international banks and financial institutions, making it harder and more expensive to conduct international transactions. In severe cases, countries can be placed on the FATF's "grey list" of jurisdictions under increased monitoring, which can affect foreign investment and access to correspondent banking services. The government will be required to report back on progress addressing the report's recommendations.

Maldivian banks do not have direct access to the global financial system. They rely on correspondent banks in New York and elsewhere – large international banks that are typically American or European, which process cross-border transactions on behalf of smaller banks in other countries – to send and receive US dollars, which underpin the tourism industry and most international trade.

If correspondent banks decide the Maldives poses too high a risk, they may impose additional compliance costs, restrict certain transactions, or sever relationships entirely – a practice known as "de-risking." Small island economies are particularly vulnerable to this. It carries the risk of effectively cutting them off from the global financial system.

Discussion

No comments yet. Be the first to share your thoughts!

No comments yet. Be the first to join the conversation!

Join the Conversation

Sign in to share your thoughts under an alias and take part in the discussion. Independent journalism thrives on open, respectful debate — your voice matters.

Maldives fails global anti-money laundering review: what you need to know

Discussion

Join the Conversation

Support independent journalism

Explore more

Related Stories